Interest earned on interest already earned.
Compounding means the interest you earn is added to the balance, and the next round of interest is calculated on the larger balance.
Over a few months the effect is trivial. Over decades it dominates everything else, which is why the date you start saving matters more than the amount you start with.
It works identically in reverse on debt you do not clear.
$500 a month for 30 years at a 7% annual return grows to roughly $609,985 — of which only $180,000 is money you put in.
See the savings page