In ArcGIS, what does the term 'georeferencing' mean?

Georeferencing refers to the process of aligning spatial data, such as raster images or old maps, to a known coordinate system so that it correctly corresponds to real-world locations. This is essential in GIS because it ensures that the spatial information can accurately overlay with other layers of data in a geographic framework. By establishing geographic coordinates for specific points in the dataset, the spatial data can be integrated seamlessly into the wider geospatial analysis, allowing for accurate measurements, analyses, and visualizations alongside other mapped data that is already correctly georeferenced.

The other options pertain to different aspects of data management in GIS but do not reflect the precise meaning of georeferencing. Converting non-spatial data to spatial data deals with transforming information without a geographic component into a geographic framework, while loading data from external sources refers to the importation process of data into a GIS system. Optimizing data for faster processing is focused on improving the performance of GIS analyses rather than on aligning spatial datasets to a coordinate system. Thus, understanding georeferencing as aligning data to a known coordinate system is crucial for effective geographic analysis and representation.