An estimate of how hard it is to rank on the first page for a keyword, usually derived from the authority of the pages currently ranking. Useful for prioritisation: high-volume, low-difficulty terms are the classic opportunity quadrant. It is a comparative score, not a promise, so read it next to search volume and intent.
Difficulty is most useful in combination. Pair it with search volume and search intent: a lower-volume term you can win, and that matches your page, beats a high-volume one you cannot.
It is an estimate built from search data, not a figure search engines publish, so scores differ from one tool to another. Compare keywords within one tool and read relative values rather than exact numbers. In a competitor gap analysis, sorting the keywords only your rivals rank for by volume and difficulty gives a prioritised list of pages to build.
Example
Two keywords suit the same page. Page one for the first is held by large, well-linked sites; page one for the second has small blogs and forum threads. Even with fewer searches, the second has the lower difficulty and is the more realistic first target.
Related terms
Where seodada covers it
Keyword Research returns volume, competition, cost-per-click and intent for every idea, and Competitor Analysis lists the gap keywords your rivals rank for and you do not.