Fodder is a term for small, weak, inexpensive ships, usually Light Fighters, used to prevent larger ships from taking damage during attacks. It can also refer to inexpensive defences, usually Rocket Launchers or Light Lasers, used to increase the chances that more advanced defences (such as Gauss or Plasma Cannons) will not be destroyed during an attack.
As targets in a battle are chosen randomly, having lots of weaker units will decrease the chance that bigger ships will be targeted, taking damage and potentially destroying them.