A citation is when an AI answer references, and usually links. A source it drew from. It's the AI-search equivalent of a ranking and a backlink at once: the engine is both using your content and vouching for it to the reader.
Being cited is stronger than being mentioned. A mention names your brand; a citation points the user to your page as the evidence, which builds trust and drives the AI-referred traffic that clicks through from answers.
Citation rates vary a lot by engine. Some (like Perplexity) are citation-heavy and link-forward, others surface fewer sources per answer, so the same content can be cited on one engine and merely referenced on another. How often your own domain gets cited (versus a retailer or competitor) is captured by Citation Coverage; how to earn more is covered in how to get cited by AI.