An "elevator pitch" is a term ad folks often use to describe the condensed version of an idea. Say you're in the elevator with a potential client. What are you going to say to that person to get them interested in the 20 seconds you've got before they reach their floor.
The reason elevator pitches are important isn't so much because you'll find yourself in these situations. But because it helps you strip away all the blah blah from your idea. If it's simple and concise, chances are it's either very boring, or very powerful. And you'll probably know which.
If you watched the Luke Sullivan video, you remember the elevator pitch for E.T. was something like "lost alien befriends boy to get home." You could probably figure out the elevator pitches for Lost, True Blood, or all seven Harry Potter book. You could also figure out the elevator pitch for the Mac/PC ads, Whopper Sacrifice, and Boone Oakley's new website.
So what's the elevator pitch for the project you're currently working on? It's a worth while exercise. Before you jump into execution, and start talking layouts or photography or long copy vs. no copy, figure out what your elevator pitch is. It's not really extra work, because if it takes you longer than 5 minutes for you to crystalize your idea into a sentence or two, it's probably not an idea that's going to go very far anyway.