crixus: you have not provided the context for this quote, the type of system involved, nor even a complete sentence, so my response will be very generic.
A Rayleigh channel is a communications channel (path) consisting of a large number of multipath reflections of random amplitude and phase. Temporal fluctuations in the received signal strength have a Rayleigh statistical distribution. It is seen in an urban area when the transmitter is a cellphone that is moving (walking or traveling in a car), for example.
Diversity is a method to either mitigate or exploit the multipath propagation. The simplest form is switching from an antenna whose signal has temporarily faded to one elsewhere that is receiving a strong signal. There are more sophisticated electronic and signal coding diversity approaches, as you might imagine. In a MIMO system, the independent propagation paths are exploited so that (conceptually, anyway) each carries a different data stream, increasing system capacity and data throughput. Indoor IEEE 802.16 wireless LAN computer routers work this way. The gain obtained in all these cases is called diversity gain.