A Full Bleed refers to printing your design all the way to the edge of the paper (or canvas). The final product will not have a border (borderless printing). Special consideration must be taken in your design as the bleed consumes ¼" on the width and the height of the product. You have two choices on how to handle printing with a bleed:
Many publications have opted to go with the reduced size option in order to save on their printing cost when a bleed is needed. For instance, if you have a photo that will be printed to the edge of a 5 x 5 final size, the image before print would need to be sized to 5.25 x 5.25 in size so when trimmed there will not be a white edge showing. In summary for a full bleed your design must allow for an extra .125" (⅛" on each side) for a total of .25" bleed.