Mod, in this case is short for game modification. It is a file that you can download that someone has created (or make them yourself) that you put in your game that changes the way the game works, or adds new gameplay. You can get mods for all sorts of things in the sims - mods to stop zombies, mods to change the way sims relate to each other, mods to change the way inactive sims are managed (story progession), mods to make more money, or less money, skill faster or slower. It's a huge list. If you google 'mods, the sims 3' you will come up with some of the main sites that provide them.
