It is traffic that is given when people have a reason to go to your site, other then reading the regular contents.
For example, if I had showed a link to a gardening website, yet named the link "My gardening site has a free giveaway! $500 for anyone who clicks!", people would click the link wanting $500, not because they wanted to learn about. So things like contests, referal schemes etc cause incentive traffic -- traffic that goes to a site not because of its regular content, but because of an incentive.