The true level of play a player or team has. So a team might have a true talent of being a .500 team, but due to Random Variation it may actually win 84 games. This also applies to players (eg being a .300 hitter).
As discussed by TangoTiger in Run Values By Number of Prior Pitches Thrown, true talent can change from game to game! So in reality, when you (attempt to) measure true talent, you’re actually measuring the average true talent over a large sample.