One of the most common tools in the trading world, leverage allows you to invest much more in your trades, with relatively small deposit amounts, (which is your margin).
What is leverage in forex? Think about it as a loan. If you have capital of $1,000 and borrow $100 for every dollar from your broker, you will have $100,000 to trade with. So now, if the EUR/USD rate moves 100 pips, from 1.1273 to 1.1373, you will have $100,000 to open a deal, in place of $1,000. This means that you can trade much larger lots and increase your exposure to the markets.
RISK WARNING: Leverage also comes with suspential risk, so it is important to understand the risks that comes with leverage before trading.