Regulation has to do with the touch and feel of the action.  All pianos need to be regulated periodically depending on how much the piano is used.  A well regulated piano will have a consistent feel throughout the keyboard. Some pianists like a heavier touch while some like a lighter feel.  This preference is achieved through regulation.  The pianist will have better control of the piano with a well regulated action. In addition, if the piano is not regulated properly, the tone of the piano will suffer because the hammers will be hitting the strings in an uncontrolled manner. 

Matt Shoemaker
Piano Tuning and Repair