Pilling is the description of the small fluff balls that are trapped on the surface pile where abrasion occurs. It is most often seen on loop pile carpets made of wool, more so when wool is mixed with man-made fibres. Wool is a staple yarn, which simply means it is made from short fibres that are spun together to make one long fibre.
When this type of fibre is woven into carpet, or clothing, and left as a loop, as opposed to cut or sheared to remove the loop and create an open or cut pile, occasional strands or ends of fibre become tangled together in areas of physical use, heal abrasion, vacuuming, etc.
It commonly appears in front of chairs, turning points, and traffic areas. Pilling however is not serious and is easily treated by taking a normal pair of scissors, or the use of a "pill" remover as illustrated above, ( Available at most departmental stores) and clipping away any pills and excess fibre, this will not in any way affect the wear characteristics of your carpet.