Molecules in a fluid constantly collide off each other. The mean free time of a molecule in a fluid is the average time between collisions. The mean free path of the molecule is the product of the average speed and the mean free time. These concepts are used in the kinetic theory of gases to compute transport coefficients such as the viscosity.
In a gas the mean free path may be much larger than the average distance between molecules. In a liquid these two lengths may be very similar.