The SHA (Secure Hash Algorithm) is one of a number of cryptographic hash functions. A cryptographic hash is like a signature for a text or a data file. The SHA-256 algorithm generates an almost-unique, fixed size 256-bit (32-byte) hash. Hash is a one-way function – it cannot be decrypted back.
Bitcoin makes heavy use of the cryptographic hash function SHA256, which stands for Secure Hash Algorithm 256-bit. Incidentally, the SHA algorithms were originally developed by the NSA.