Apical dominance is a phenomenon wherein the main central branch grows stronger than its side branches. In the figure below the active apical bud produce more nodes as it grows, and leaves develop at each node. On the axils of each node are lateral buds. These buds will form the future branches. The apical bud is the most active part of the shoot, as it grows it produces hormones called auxins which suppresses the growth of the lateral branches down the shoot.

Figure 1 - Diagram of a shoot

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In bonsai, the active apical bud is often removed to encourage the growth of lateral branches. This process stops the production of auxin which frees the bud to develop into a trunk. Sometimes putting a cut right above the dormant bud will stop the flow of auxin thereby allowing the bud to develop into a branch. This is important in bonsai as you need to develop side branches at the proper places. Mastery of apical dominance is a must.