Key to decentralisation is the ability of stakeholders to delegate stake. In a proof of stake system such as Cardano, stakeholders have an obligation to take part in the protocol. To make this practical, stakeholders are able to delegate their obligations to others — so-called stake pools — which are able to fulfill the obligations. Stake pools operate core nodes that are online at all times and take part in the protocol and produce blocks in the blockchain.

In layman terms, Staking is used to generate blocks on blockchain as similar to mining in bitcoin or ethereum. Cardano uses a proof of stake protocol for generating blocks and hence the more ADA you have the more you can help generate blocks and earn ADA.