Cascading parameters provide a way of managing large amounts of report data. You can define a set of related parameters so that the list of values for one parameter depends on the value chosen in another parameter. For example, the first parameter is independent and might present a list of product categories. When the user selects a category, the second parameter is dependent on the value of the first parameter. Its values are updated with a list of subcategories within the chosen category. When the user views the report, the values for both the category and subcategory parameters are used to filter report data.
The above definition is from Technet: http://technet.microsoft.com/en-us/library/dd255197.aspx
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