It's when you grab the ledge when someone else is already grabbing it so you can "steal" it and knock them backwards. It generally has two uses for edgeguarding:
- You can, with some characters and against some characters (it's very MU-specific) immediately retaliate while they're still in the animation from being trumped. For example, Sheik can bair after trumping for a kill. Charizard can Dragon Rush (and maybe fair?) trumped opponents.
- If you can't do the above, you can get back on the stage. Your opponent will now have no invincibility when grabbing the ledge, so they'll either have to risk recovering high, or mix-up their recovery time to grab the ledge when you're not ready to attack. (for Charizard, down smash is your best option, but forward smash can hit some characters that don't hang low)
Note that you can avoid getting ledge trumped if you buffer a ledge attack, roll or jump.
For more information, check this video by False: