Decking an engine block is the process of cutting down the portion of the block where the cylinder heads meet. It is sometimes necessary to remove material from this part of the block in order to square up the cylinder heads. The deck of the block should be perpendicular to the crankshaft center line. A block is also decked to ensure a good, flat surface in order to achieve a good gasket seal.
Engine blocks are also decked to create proper deck height. Deck height is the distance between the crank center line to the deck surface. Deck height is precisely calculated to dial-in compression and proper quench area + to accommodate gasket thickness. All of this is done in the interest of creating a good mixture of the air+fuel charge and ultimately more efficient combustion. Whenever you change deck height, you must also make sure that there is sufficient piston-to-valve clearance. Otherwise, ka-blam-oh!