Information design is about preparing the information on a website in the best possible way, so that users can efficiently and effectively find and digest information. In larger sites, just finding information becomes challenging, but in sites both large and small, processing it is always a design problem.
A quick example of information design is in how you organise and format text on a page. Because people tend to skim through content on a screen, it's much better to organise it with headings and subheadings, diagrams and visual hooks, and general variation for the eye. Techniques like these make the information on a page much easier to digest. But information design isn't limited to what's on a single page, itis also about what structures you use to house the site's parts, how you lay out the menus and submenus and how you cross link different sections.