It refers to a flop, turn, or river where all the cards are of different suits. When the community cards present a rainbow, it means that no two cards share the same suit.
It is used to describe the diversity of suits on the board and can influence the possibilities of flush draws for players holding suited hole cards.
A flop of 2♥2♥2♥ is considered a rainbow flop because it contains one card of each suit (spades, diamonds, and hearts).