Wikipedia says:

Wind chill is the apparent temperature felt on exposed skin due to the combination of air temperature and wind speed. Except at higher temperatures, where wind chill is considered less important, the wind chill temperature (often called the "wind chill factor" by laymen) is always lower than the air temperature, because any wind increases the rate at which moisture evaporates from the skin and carries heat away from the body.

In other words, wind chill accounts for loss of heat when warm air around a body is replaced with colder air. The factor is an indication of the effect of the combination of air temperature and wind speed on human comfort and safety.
If you take to the outdoors for recreation, knowing how to calculate the wind chill factor is vital. It can help you prevent hypothermia, frostbite - even death - especially at high altitudes, in cold weather climates (northern North America for one) and on large bodies of water.

The formula for calculation is:
WC = 35.74 + 0.6215 TF + ( 0.4275 TF - 35.75) V 0.16

Where WC is the wind chill index, V is in the wind speed in statute miles per hour, and TF is the temperature in degrees Fahrenheit.

If you find your brain overheating just trying to work that out, you can always visit the US National Weather Service's Windchill Temperature Index Chart.