A slug is the part of a URL identifying a specific page. Generating one converts a human title into a form safe for an address: lowercase, hyphen-separated, no punctuation.
What the conversion does
Spaces become hyphens, punctuation is removed, accented characters are usually reduced to their unaccented equivalents, and everything is lowercased.
Why hyphens rather than underscores
Search engines treat hyphens as word separators and have historically been less consistent with underscores. Hyphens are the established convention for URLs.
Keep them short and stable
A slug should carry the distinguishing words and drop the filler. It should also stop changing — every change needs a redirect.
Try it: Generate URL Slugs on SeoWolf's Notepad.