Spot trading is trading executed in a “spot market.”
Investopedia: “A spot market is a commodities or securities market in which goods are sold for cash and delivered immediately.”
In a spot market, all trades happened for real. When you place an order, be it a market order or a limit order, the order will be actually executed and there will be actual exchange of goods and cash (in this case, one currency for another) between traders.
For more details, see Spot Trading & Margin Trading section.