Rebasing a branch means that all of the commits for which your branch is ahead of the master branch are put aside for a bit. Meanwhile, all of the commits for which the master branch is ahead of your local branch are now merged to your local branch. Finally, all of your own commits that were set aside are now reapplied. The following diagram shows a branch before and after a rebase commit:

After rebasing the source branch, it is now merged into master. The advantage of this kind of merge is that you retain all individual changes in one single commit history.