Lawn thatch is a layer of un-decomposed stems, roots and other debris that accumulates near the soil surface.   When thatch becomes excessive, the lawn may root into the thatch rather than the soil. Since thatch does not hold moisture, lawns rooted into thatch will not tolerate dry weather or cold temperatures. Thatch can harbor insects and diseases,  limit root development  and restrict water infiltration. The rate at which thatch accumulates is determined by moisture, environmental conditions and the type of grass. Over application of nitrogen promotes thatch accumulations. 

NOTE: Contrary to popular belief, grass clippings do not contribute to thatch accumulations. In fact, grass clippings, left on the lawn, can stimulate soil biomass and produce nutrients necessary for healthy plant growth.