Interpretation

Definition: the explanation of the meaning of the poem.

Example:

 Once upon a midnight dreary, while I pondered, weak and weary,
Over many a quaint and curious volume of forgotten lore--
While I nodded, nearly napping, suddenly there came a tapping,
As of some one gently rapping, rapping at my chamber door.
"'Tis some visiter," I muttered, "tapping at my chamber door--
Only this and nothing more."
~ Edgar Allen Poe, The Raven

( You can interpret from this stanza that a man is sleeping in the middle of the night when suddenly, he hears a tapping on his door.) 

Significance: The interpretation of a poem may be the most important of what you get from reading it. Understanding what the poem is telling you and the explanation is necessary if you want to truly enjoy it. A poem with no meaning, nothing you can interpret from it, is not a good poem.