Anti-alising is activated either by an in-game menu or in your graphics card settings.
What it does is smooth out the "jaggies" created by low resolutions. Take a circle drawn in a 10x10 'screen'. It'll look a lot less smooth than one drawn in a 100x100 screen, because you don't have as many pixels to draw the edges with.
What AA does is take those rough edges and smooth them out a bit, giving you the effect of higher resolutions without as much of a performance hit.
Or that's what its *supposed* to do; it doesn't always work out.
