The Thermal Design Power (TDP) (sometimes called Thermal Design Point) represents the maximum amount of power the thermal solution in a computer system is required to dissipate. For example, a laptop's CPU cooling solution may be designed for a 20 W TDP, which means that it can dissipate (either via an active cooling method such as a fan, a passive cooling method via natural convection, via heat radiation or all three modes of heat transfer) 20 watts of heat without exceeding the maximum junction temperature for the chip. The TDP is typically set not to be the most power the chip could ever draw (such as by a power virus), but rather the maximum power that it would draw when running real applications. This ensures the system will be able to handle all applications without exceeding its thermal envelope, without requiring a cooling solution for the max theoretical power, which would cost more and achieve no real benefit.
TDP can be defined in different ways by different manufacturers. See the SilentPCReview article below.