Well, as with any sort of viscosity, it is really a measure of how momentum is diffused through a fluid. If you are familiar with the heat equation, you should notice some analogs between it and the Navier-Stokes equations.
The heat equation:
[tex]\frac{\partial \phi}{\partial t} = c^2\nabla^2 \phi[/tex]
The incompressible Navier-Stokes equation:
[tex]\frac{\partial \mathbf{v}}{\partial t} + \mathbf{v}\cdot\nabla\mathbf{v}=-\frac{1}{\rho}\nabla p + \nu\nabla^2\mathbf{v} + \mathbf{f}[/tex]
The heat equation is a simplified version of the diffusion equation that describes the diffusion of basically any quantity through a material. In heat transfer, [itex]c^2=\alpha=\frac{k}{\rho c_p}[/itex] is the thermal diffusivity.
In the Navier-Stokes equations, notice that the [itex]\nu\nabla^2\mathbf{v}[/itex] term takes the same form, only the N-S equations are a momentum balance, so the kinematic viscosity, [itex]\nu[/itex], is essentially a diffusivity constant that describes how momentum diffuses through the medium. In other words, it describes one particle's ability to affect the momentum of the adjacent particles.