Headspace is the space from the top of the jar to the food or liquid in the jar.

Correct Headspace Guidelines -- As a general rule:

Why is it important?

Too little headspace -- Some foods, especially starchy foods, swell more than others and require additional headspace. If too little headspace is allowed, as food boils inside the jar it may be forced under the lid, leaving residue on the sealing surface and possibly preventing the lid from sealing.

Too much headspace -- The jar may not seal properly because the processing time is not long enough to drive the air out of the jar. And the food at the top of the jar may discolor.