The term "Bard" is an archaic word for a poet, often used in reference to ancient poets or storytellers. By calling Shakespeare the "Bard of Avon," people are acknowledging his status as a great poet and playwright, and associating him with his hometown.
The title "Bard of Avon" is also sometimes used to differentiate Shakespeare from other notable literary figures, such as the Scottish poet Robert Burns, who is known as the "Bard of Ayrshire."