Data binning, also called data discrete binning or data bucketing, is a data pre-processing technique used to reduce the effects of minor observation errors. The original data values which fall into a given small interval, a bin, are replaced by a value representative of that interval, often a central value (mean or median). It is related to quantization: data binning operates on the abscissa axis while quantization operates on the ordinate axis. Binning is a generalization of rounding.
Statistical data binning is a way to group numbers of more-or-less continuous values into a smaller number of "bins". For example, if you have data about a group of people, you might want to arrange their ages into a smaller number of age intervals (for example, grouping every five years together). It can also be used in multivariate statistics, binning in several dimensions at once.