A business entity is a representation of a real-world object. In an ERP system, relevant business entities could be, among many others, "Customer," "Sales Order" or "Invoice."
A business entity (or, to be specific, an instance of a business entity) contains data fields (such as "John Smith," the name of a customer) and metadata that describes the data fields (for example, the name of the data field, such as "Customer Name," and the type of the data field, such as "Text").
In the integration between Business Notification and Navision, a business entity has one more feature: an event. For example, a "Customer" business entity could have these events: "Customer Blocked" and "Customer Credit Limit Changed." When one of these events is raised in Navision, that is when "something happens," such as a customer being blocked or a credit limit being changed, a document, containing both the name of the event ("Customer Blocked") and the "Customer" business entity, is sent to Business Notification.