Leverage gives the traders the ability to trade with more than they actually have. Say for example you have 1:500 leverage, that means that for every $1 USD, you actually have control of $500 USD in exposure to use and participate in the forex market with. Thus, you can greatly increase your profits, however, you can just as easily incur significant losses.
Therefore, leverage gives a trader the ability to control a larger position using less money or margin. While this can provide the ability to increase larger profits, it also means trades can result in larger losses. This is why leverage is known to be called a "double-edged sword".