The phrase skill ceiling refers to the maximum level of skill at which increased performance can be seen. It's used primarily in the topic of video, computer, and traditional games to describe how far one can go in developing and perfecting their play. Consider for example tic-tac-toe. There is an optimal strategy and it's easy enough to figure out that I'd bet the average person can deduce it in ten games or less if they're motivated. Contrast this with Chess or Go which have seemingly infinite skill ceilings. Other games like Poker have unclear skill ceilings where the optimal play against say a computer isn't particularly hard to master but the infinite regress of "they think I think they think ... " theory of mind crap inherent in bluffing make it vastly more complicated than just figuring out where exactly to fold. In general it's not too hard to tell where a game's skill ceiling is just by asking how hard is it and would it be easier if you were better at the game.
Skill ceilings interest people because in general games are fun in relation to the overcoming of challenges. Idle games withstanding, most games are played because they offer a certain kind of novel challenge, introducing knowledge and techniques and forcing the player to apply these skills under increasingly taxing constraints. It's common to frame stress as a bad thing but properly portioned stressors are a key component of fun. A game that you beat your head against to no effect is terrible, but a game that you could win in your sleep is just as bad. For this reason a game which has a high skill ceiling offers more play time and a better value proposition.
All of this becomes even more important when talking about competition. Nobody outside of your circle of friends cares if you can play connect four flawlessly. More people will care if you are in the top ten cup stackers. Everybody cares if you're the best player in the NFL if only because you're rich. High skill ceilings make things like competitive play in e-sports possible because they allow for impressive displays which in turn can draw a crowd. Economic incentives being what they are, I expect this term will only get more usage in the future.
IRON NODER THE THIRTEENTH