This equation represents the concept of time dilation in the theory of relativity, where δt' is the time interval measured by an observer moving relative to a stationary clock, and δt is the proper time interval measured by an observer at rest with respect to the clock. The factor of √(1 - v²/c²) accounts for the effects of relative motion on the passage of time, illustrating that time moves slower for objects in motion compared to those at rest.