Imagine you bought water over time, but every time, you got it in a small bottle, where each bottle is a utxo with a little Bitcoin in it. Utxo management is taking the water from all of these little bottles and pouring them into a single, big bottle, or one large utxo.

Spending from a large utxo is cheaper because there's only one input address to put in the transaction. It's theorized that one day the smallest utxo's won't be worth the fees it'll take to spend them, so utxo management while fees are low is crucial.