Used in this context of a prayer said before a meal, grace literally means 'thanksgiving'. You are supposed to be thanking God for the gift of His bounty supplying the most basic of human physical needs.
Many people believe that this prayer is obligatory, not optional, and that it should be said not only before the meal, but also after the meal.
Christ gave us a tremendous example as he broke bread with His disciples at the Last Supper, and many other times throughout his ministry.
In early monasticism, each dish would be brought out separately, and prayer would be said prior to each of these dish courses.
Throughout the history of the Church, saying 'grace' or some prayer before each meal has been a traditional staple of the faithful, and teaching your children the proper way to say grace was a key educational effort for families.
