It is a region presided over by a resident bishop that is similar to a diocese in other Christian denominations.
In some cases, such as the Western Jurisdiction of the US as well as some places internationally, an episcopal area covers a very large territory (several US states or countries).
In the early histories of the denominations which formed the UMC, bishops were elected at-large, not having specific "residential responsibilities", but expected to exercise episcopal supervision throughout the denomination (including internationally), traveling throughout "the connection".
The objective was to secure for each part of the church more certain and constant episcopal supervision.
Methodist bishops continued to serve as episcopal leaders of the entire denomination, but with specific residential and presidential duties to the annual conferences within their areas.