Bond financing is a method of fundraising revolving around selling debt securities. The entity issuing the bond will set the maturity date, or date when principal payment is due. Until then, the issuer agrees to pay interest (generally fixed) to the lender.
When people are talking about trading bonds, they're often referring to US Treasury Bonds. Here's how they work in layman's terms:
The government wants to borrow money from you. But, of course, you're not just going to give them your money for nothing! You want interest! So they agree that they'll borrow your money and pay you interest when they give it back. The interest you get is usually not going to be that great compared to other investments, but it's considered a less risky instrument to invest in. In order for the validity of the treasury bond to fail, the entire financial structure of the country would have to fail between the time you bought it and redeemed it.