Evapotranspiration (ET) is the amount of water that evaporates from the soil and transpires from the plant (i.e. grass). Thus, by measuring evapotranspiration, an ET controller dictates irrigation schedules based on the amount of water the soil and plant actual need, as opposed to simply time of day, for instance. This helps to properly manage turf and plants while conserving water.
Check out this article on advances in landscape irrigation technology.