Cryptocurrency mining is an operation best undertaken with multiple miners, or as an organisation. Mining pools are arrangements where multiple miners pool their resources together to increase profitability.
The manner in which cryptocurrency mining is set up is to incentivise people to try and earn mining rewards from unlocking blocks. This incentivisation leads to competition, as well as co-operation. Mining alone, with a single rig, means a very slim chance of earning a reward from unlocking a block, but pooling resources increases chances.
If we look at Bitcoin as a prime example, it is difficult, and resource-heavy, to solve an equation to unlock a block. However, things do become easier if there are more mining rigs in operation - perhaps at a mining farm - or better yet, if a mining pool is set up.
A mining pool is an organisation of miners all operating under the same umbrella. Instead of working alone to try and reap the difficulty to obtain block reward, they share the costs, and the difficulties, as well as the rewards.
There are a number of major mining pools that exist today. They will focus on different coins, and put a substantial amount of computing power towards mining blocks. This also causes issues with centralization, but this increased mining power does ensure a more secure network as well.
Mining pools however can decentralize their operations somewhat. A mining pool is a much more fluid than say a mining farm where one organisation owns all the machinery. A mining pool is an organization that anyone can be a part of, and lend their computing power to ensure more chances of a reward.
Being part of a mining pool means a higher chance of rewards as there are hundreds if not thousands of people working together, however, it also means the payout is divided a lot more and relates to the amount of hashing power you are offering.