This is the act of taking natural language, i.e. normal English, and translating (processing) it to something a computer can understand.
A great example of NLP is in Apple's own Calendar.app: you can add an event using simple English language. This could be a simple algorithm or a basic form of AI, it simply processes the text to parse the key bits out of it.
I personally doubt it's using AI, as it doesn't seem to understand every type of expression. It's probably just a simple algorithm. But more complex language processing is also known as NLP, it's simply what the whole field is referred to as.
As you can see, it's not perfect, simply because it's (probably) an algorithm. There are quite possibly an infinite number of ways to express that a meeting has a duration of 30 minutes, and Apple's NLP doesn't quite seem to pick it up.
Another example of NLP in Calendars is the one in Fantastical. It seems to have a much more advanced algorithm for NLP that can recognise many more forms of expression.
A large part of (AI) NLP is a language model, which allows the model to understand and/or output natural human language. However, NLP can never be perfect. It is inherently fuzzy, and there will always be some case where some information is left out or misinterpreted by the computer program. That's simply the truth when it comes to dealing with such extremely flexible and abstract things as human language.