What are sim contacts on my iphone 5 settings?

I was going through settings for contacts on my iphone 5 and one of the options was import sim contacts. What does this mean?

On GSM phones (phones with sim cards, like ATT and Tmobile), have sim cards… SIm cards regulate the GSM frequency of the cell tower, give your phone signal, marks the phone with yoru account and phone number, and can hold contacts (phone numbers)…

depending on the user, some poeple like to save contacts to the sim card, in case the phone breaks. Some like to save it to the phone itself and not the sim, in case the sim fails… There are other reasons as well… Its your choice…

import and export means to move stuff… Import = in… Export = out… So, to import sim contacts means to put the contacts IN the phone from the sim card.