Light from the sun, or a lamp or candle flame are all examples of unpolarised light. Put very simply, they emit electromagnetic waves that can vibrate in every direction (or plane).
When these waves are limited to a singe plane by filtration this is termed polarised light. In dermoscopy this is done with the use of a polarised lens. This lens is a filter that has long chains of polymers orientated in a singe direction. All directions but one are filtered out.
Why is this useful for looking at moles? Polarizing sunglasses are useful boating as they can reduce the scatter of light on the surface of the water that results in glare. This enables you to see the rocks under the surface.
The same is true when examining the skin. Dermoscopy enables you to see a well-lit; polarised and magnified image of the skin lesion. You will see a much clearer image than you would under normal circumstances. This improves diagnostic accuracy and reduces the rates of unnecessary surgery.