This is a term used in Film Editing. An establishing shot is a shot that sets the context in the movie. This is used very effectively during the editing process. For example if the story or plot involves the characters in Malaysia then a view of the Petronas tower would be a establishing shot. Post this the scene of two people discussing in a coffee shop would set the context for the audience that the scene is happening in Malaysia. In reality the shot might have been actually taken elsewhere but through the establishing shot the appropriate illusion is created.
In the movie Chandramukhi some of the shots in were caned in Mysore Palace but through establishing shot of the house the audience believed the set up was actually inside the house. In many movies you might have seen the shot of a flight landing or flight take off as an establishing shot to show the scene has transferred between locations. This technique was particularly used in old movies extensively. However in the new movies this is used to a lesser extent. A simple technique if not used correctly audience loose the context of the screenplay.