Resolution, also known as resolving power, is the ability of a telescope, or other optical system, to differentiate between two objects in the sky that have a small angular separation. The closer two objects can be while still allowing the telescope to see them as two distinct objects, the greater the resolution of the telescope.
Two standards for testing resolution are the Rayleigh criterion and the Dawes limit. Both were developed before modern advances in lens coating, glass formulation, and improved optical precision figuring and design, not to mention, such innovations as active optics and interferometry. A related concept is spectral (or frequency) resolution, which is the ability of a telescope to differentiate two light signals that differ in frequency by a small amount. The closer the two signals are in frequency while still allowing the telescope to separate them as two distinct components, the greater the spectral resolution of the instrument.