Latency in this context is uncertainty in timing of a thread. Its especially important for systems that use software step generation. since the step timing accuracy is determined
by the repeatbility of the base thread execution. A late step may cause a complete step motor stall. The other way of looking at it is that the maximum base thread latency should be less than about 1/2 of the maximum step rate (for 1/10 or so ustep drives) Looked at this way, latency determines the maximum (software) step rate.
HAL is the Hardware Abstraction Layer. basically the way LinuxCNC connects the control GUIs, hardware, components, and machine controller proper in a very flexible user editable way
www.linuxcnc.org/docs/HAL_User_Manual.pdf