In a nutshell, Facebook retargeting (also called Facebook remarketing) is a way to show Facebook ads to people who have previously visited your web site.

A Facebook tracking pixel is a bit of html code Facebook gives you, that you put onto your web site. When someone visits your web site while logged into Facebook, Facebook keeps a record of that (for up to 90 days).

Then you can set up a Facebook ad is shown only to people who have been to your web site. Because you are advertising to people who have already been to your web site, it can be very cost-effective, because you know they are already interested enough in what you have, to have visited your web site.