Since with betfair you're betting against other individuals. A matched bet is where your bet has been matched against another user.
If its showing as unmatched its not been paired with anyone betting against you and you'll get no wins/losses until its matched.
Sometimes if odds change quickly it will result in unmatched bets, especially if you're betting in the last fews minutes.
Eg
Say you see the odds are currently 1.18 and think "ooh i'll have a bit of that". But whilst you're placing the bet at 1.18, the odds other people are offering drop down to 1.12. Theres then nothing available to match your bet against, so you'd need to cancel your unmatched bet and create a new one at the lower revised odds.
With matching, Betfair will automatically match bets upwards in your favour (eg a 1.18 bet up to 1.26) but never the other way
One word of warning, is if you put a bet on at 1.18 and see its unmatched so think i'll go and place a new bet at 1.12 and then cancel the 1.18 afterwards. Sometimes odds will jump back again and you'll end up with both bets matched and may end up betting much more than you intended. Happened to me a few times.
Hope that all makes sense