An inode is a record in a disk table which contains information about a file/folder such as its size and owner.
The number of inodes you use represents the number of files/folders you have on your web hosting account.
Rebel Networks customers can see the number of inodes they are using from their cPanel > Inodes Usage.
When a file is opened, the file's inode is read by the kernel. The more files/folders you have, the more inodes you use. And the more inodes you use, the more system resources your account consumes.
This is why the number of inodes on a file system is limited. If you run out of inodes, your account may be excluded from the backup system or may even be suspended.