The Target Platform refers to the plug-ins which your workspace will be built and run against. It describes the platform that you are developing for. When developing with PDE, the target platform is used to:
Whereas the target platform refers to your currently active bundles, a Target Definition is a way of determining the plug-ins to add to the state. You can have multiple target definitions, but only one definition can be selected as the target platform.
The target platform and your target definitions are managed on the Target Platform Preference Page. This page lists all target definitions that PDE has access to and displays which definition is being used as your current target platform. Target definitions can be created and edited here using the Target Definition Content Wizard. To make for easier sharing among a development team, targets can also be created and edited in the workspace as xml files with the extension ".target". These files can be edited using the target definition editor and can be created using the New Target Definition Wizard.
By default PDE provides a default target platform which simply points to the plug-ins in your currently running Eclipse instance (often referred to as your host). For Eclipse plug-in developers this might be all you need. RCP developers must be more careful managing their target as adding dependencies increases the size and complexity of their application. When creating a new target definition for RCP, consider using the RCP template (available with or without source).
For up to the minute target troubleshooting help see the Target Definitions Wiki Page.