Degreeing a cam, in a total nutshell, is a process by which you ensure that the cam's factory specs and valve opening/closing events are accurate. In other words, you are making sure that the valves are opening and closing in relation to the crankshaft and piston position as the cam manufacturer intends it to.
Why do you need to do this? Because cam manufacturers, even the respected big name ones, can make a cam that's valve event specs are off. When they are off, it is usually just by a degree or two, but other factors, like the tolerances on the crank itself, and on your timing chain, and the crank and cam sprockets, can all have an effect on whether your cam is doing what it's card says it should do and when it should do it.
Let's say you discover, during the camshaft degree process, that your cam's timing events are 2 degrees off. Well, than it will do you NO good to simply align the sprockets "dot to dot" expecting things to be correct. If you had a cam whose timing events were 2 degrees retarded compared to what the cam specs SAYS it should be, you can correct this by advancing the cam 2 degrees. This means that your sprockets won't be dot to dot when you #1 piston is at TDC, but that's ok because that is the whole purpose of degreeing your cam, to fix any problem that may arise like this.
NOW....once you have degreed your cam, now you can decide whether you want to leave it as is, or advance or retard the cam timing.
Using my above hypothetical example. If you advanced your cam timing four degrees, and you had already advanced the cam timing 2 degrees to correct the valve timing events during the degreeing process, than when #1 piston was at TDC it would APPEAR that your cam was 6 degrees advanced in relation to the crank. In reality, it is only 4 degrees advanced, the other 2 degrees of advance was only a correction to get it where it should have been in the first place.