Interdiction is any system which interferes with the navigation of other ships, usually preventing them from orienting themselves in space so that they cannot triangulate a wormhole jump or otherwise leave the sector. Needless to say, keeping a ship in a sector that it would rather leave is often a winning tactic in combat.
Interdictors are most commonly individual devices that are launched into space and emit an interdiction signal. These can simply be targeted and shot by your ship's weapons; their only defense is that there are usually several of them.
Certain advanced starships may possess onboard interdiction. That means the interdiction signal is emitted by the ship itself, and enemy ships will remain trapped in the sector until that ship leaves, is destroyed, or chooses to deactivate interdiction. Such ships are usually encountered only in invasion forces or other particularly strong fleets.
Interdiction is usually used against civilian pilots, but you may discover a means to have interdiction of your own through interacting with the game world.
Whether launching interdictors or using onboard interdiction, the command is INTERDICT.