You adjust your sights so that, when you are aimed at 6 o'clock on a specific target at a specific range with a specific load, the bullets strike several inches higher, in the X ring.
A number of target shooting strategies involve adjusting point-of-aim/point-of-impact to be different, usually because the intended portion of the target (usually an X ring) is a lot harder to see and aim precisely at compared to some other part of the target.
For example, PPC shooting involves shooting at a fairly life-size humanoid silhouette target with the X ring in the middle of the chest and only very thin lines dividing the parts of the target into X, 10, 9, etc. scoring zones. The center of the 2"x3" X ring is 12 inches below the center of the neck of the silhouette. You can't see the scoring rings at 25 and 50 yards, where a lot of the match is fired from. So a PPC gun will have sights with adjustment that allows the shooter to aim at the center of the neck ("neck hold") and have the bullets strike 12 inches lower in the center of the X ring, because a neck hold is so much easier to be precise with, because it is much easier to see. The match is fired at 7, 15, 25 and 50 yards, and the sights are made so they can be quickly and repeatably adjusted for each distance.
My explanation is probably as clear as mud...
edit: I see swelfelo's reply is shorter, clearer and understandable. I type slowly!