Malolactic fermentation is a process in winemaking where tart-tasting malic acid, naturally present in grape must, is converted to softer-tasting lactic acid. The process tends to create a rounder, fuller mouthfeel.

Grapes produced in cool regions tend to be high in acidity much of which comes from the contribution of malic acid. Malolactic fermentation is also thought to generally enhance the body and flavor persistence of wine, producing wines of greater palate softness and roundness. Many winemakers also feel that better integration of fruit and oak character can be achieved if malolactic fermentation occurs during the time the wine is in barrel.

Source: http://en.wikipedia.org/wiki/Malolactic_fermentation