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Bleed is printing that goes beyond the edge of the sheet after trimming.  It is part of the background that will be trimmed off after the file is printed and cut down to the finished size.  As such, the bleed is an area where the document image is extended from one side of the paper to another without critical information in it.  If a bleed isn't included in document setup, there is a good chance that there will be a gap between the edge of the printed area and the cut line.  This happens because there is a tolerance when cutting the printed piece.