Returns get published for all sorts of periods: six months, one year, three years. Annualized return converts any period into a per-year rate so numbers can be compared on one basis — just as you compare two products by price per kilo, not per package.
The conversion uses compounding, not simple division: 30% over three years is not 10% per year but roughly 9.1%, because each year's gains grow on top of the previous year's. The longer the period, the bigger the gap between the two methods.
Watch the opposite direction too: annualizing a short period (a month or a quarter) inflates it in ways that can mislead — a 3% month is theoretically over 42% a year, a pace that rarely lasts. That is why annualized figures are normally computed only for periods longer than a year.
On Fundtrics, multi-year returns are shown on an annualized basis so that comparisons between funds stay fair regardless of each fund's age.