At its most basic, Scene Framing means focusing play on only the interesting events within the narrative of the game, deciding what occurrences are too mundane to waste time describing and which entail enough conflict to play out in detail. A GM dismissing several days of game time with just the phrase, "the journey over the mountains is long and difficult," but then shifting into round-by-round combat resolution when bandits attack is rudimentary scene framing. More sophisticated scene framing involves mapping out the particulars of a scene, such as what the location is like, who is present and what's at stake for everyone there. He probably won't explicitly state it, but the GM presenting the bandits in the above example is implying several things: that the location is a rugged mountain pass, that the only people present are the bandits and the player's character's, and that the bandit's are desperate enough to get the character's wealth they're willing to risk death in combat. Also, crucially, that the scene is going to be about combat above any other kind of conflict.
Who gets to frame the scenes and decide what's interesting or not is an important issue to consider. Traditionally The GM gets to do this, but some games use formal processes which hand over some of this authority to the players. For instance, Primetime Adventures, which is meant to simulate a TV show and so borrows a lot of TV's structure, has one player say what the next scene will be about (in terms of whether it's a plot-driven scene or a character-driven scene), where it will take place, and what's happening when the scene starts. When the scene is played out in full, and the next player gets to frame a scene.
The authority to frame a scene gives you a lot of power over the story. Some games give you full latitude to jump forwards in time, or backwards for a flashback scene. A statement as simple as "this next scene is with Igor working in the mad scientist's lab" establishes a lot of facts: Igor is alive (if that was in question), Igor is in a certain place that might not be where someone else authoring the story would have put him, et cetera. It's important to be mindful of other player's expectations of where the story is going, and to either fulfill or challenge them in a way that keeps everyone excited about the game proceedings. (This goes double for people experienced with tabletop roleplaying, who might not be accustomed to players having this kind of broad narrative power.)
EXAMPLES
The Shab-al-Hiri Roach
We're playing The Roach. It's my turn and my character, Dr. Gorton, is in the spotlight, and I really want to put the screws to my rival, Professor Consoutle-Mathis, played by Steve. In The Roach I have effectively unlimited scene framing power, proscribed only by past events and a unanimous "I call bullshit" vote from my friends.
ME: OK, we know that Counsoutle-Mathis has a thing for Regina Sutton. One of Dr. Gorton's Enthusiasms is technology, so I've been making some home movies, hidden in the bushes and using a home-made telephoto lens.
STEVE: You bastard! No!
ME: You guys have been going at it behind the boat-house like a pair of rabid pumas. I have it on celluloid, and I've arranged to show a short "art film" during the upcoming talent show to destroy your reputation. The campus radical, L. Scott Collins, is directing the Follies and he thinks it's going to be something edifying and beautiful, so he's on my side.
STEVE: Maybe Consoutle-mathis gets wind of this in advance?
ME: Absolutely. Let's frame a scene around the Pemberton Follies talent show, and see if my little gem actually gets shown or not.
(In this case, note that I created a relationship between Professor Consoutle-Mathis and Regina Sutton, as well as my incriminating film, as part of framing the scene. I also accepted Steve's excellent suggestion and made that the crux of the conflict.)
(Another example or two here…)
FUN WITH SCENE FRAMING
Knowing when to end a scene is just as important as framing the opening of the scene. For a little fun with scene framing, when a scene comes to a gradual, natural close and it's time to move on, the GM can do the Movie Director gesture of "hand out, fingers open, then slowly draw the hand back while closing the fingers", while saying "aaaaaand… … SCENE!". It's a cute little toy that lightens the mood and can poke some good-natured fun at scene framing. It's better to "cut" a scene before it peters out.
"And cut to — " is another good toy. GM's can aggressively frame scenes or cut from scene to scene when the party is split to keep interest high in the characters who are off-screen. Cutting at a climactic moment "The guard spots you! Let's cut to George!" can be great but is hard to remember to do.