In literal terms ossification is the gradual process of something turning into bone (or, metaphorically, hard like bone). When used in terms of protocols and/or governance it describes the evolution of something which may start off somewhat flexible into something more rigid and fixed.
This may include making pieces of the protocol less governable and/or making them immutable (non-changeable). For example, removing or reducing certain functionality (e.g. the ability to mint stETH) or, making smart contracts non-upgradeable. In general, there’s a balance that needs to be maintained because if you ossify too early, you may not leave enough flexibility in the protocol to adapt to new network-level functionality or changes; on the other hand, if you never ossify then it means that governance may always pose a critical or systemic risk to a protocol, and the larger the protocol grows the more costly and complex it becomes to mitigate potential impacts.