What is "incorporation by reference"?

Incorporation by reference includes the entirety of another document into the present document.  Instead of merely cutting and pasting the entirety of the other patent application into the current patent application, you can incorporate it by merely making a "reference" to the other document.  

Incorporation by reference mainly serves to protect patent prosecutors in case they neglect to send in a sheet of drawings or one of the pages from a patent application they are claiming priority to.

Caution: If the document to be incorporated by reference contains any limiting language, by incorporating it by reference, you will also sweep in that limiting language into the current patent application as well.  Always be sure to carefully review the document intended to be incorporated before incorporating it by reference.