Response time refers to how quickly the image on the screen changes after the screen has been updated or "refreshed" with new information. Most displays have a refresh rate of 60Hz, that is the information on the screen is being updated 60 times per second. That doesn't mean, however, the LCD panel itself is able to keep up with that rate. If the response time of the LCD is slow, the image on the screen won't change quickly when refreshed, producing an image which is blurry or which ghosts on fast-moving images.
LCD's used to be awful at this and have gotten much better, however even an LCD with an 8mS response time is significantly slower to change it's image than a CRT or Plasma display. The best thing to do is watch the kind of fast moving content you like on a particular display and see if it's acceptable.
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