Plain English Meaning
ATC is telling you to set your transponder to either its normal power setting or its low-power setting. Normal is the everyday setting; low is rare and only used when ATC asks for it.
Full Definition
An ATC instruction directing the pilot to switch the transponder to either the LO (low-sensitivity) or NORM (normal-sensitivity) power setting. NORM is the standard operating position used for the vast majority of flight; LO reduces transponder reply power and is used only when ATC specifically requests it, typically to resolve interference or overlapping returns when an aircraft is very close to the radar antenna.
Context Anchor
Heard in radio communication with when a needs a transponder setting for or quality.