It is a sign of a weakness and/or injury in the sacro-iliac joint. The horse will find it challenging or even painful to properly engage the hindquarter and may not hold up to heavy jumping or dressage work, or speed events.
I had a horse with hunter's bump. In his case it was weakness. In the case of it being injury, it is usually a strain, from being incorrectly prepared for the kind of work asked, or simply a bad takeoff (for a jump or for a gallop, either way).
A hunter's bump is, aesthetically, a bumpy-looking croup. Generally instead of being flat or on a uniform, convex curve, it has a dip. In my experience horses with a flatter croup are more prone to it than horses with a nice convex croup, however horses with a mildly flat croup are often good jumpers (assuming the rest of their hindquarter angles are good) so it is a fault I personally would be willing to overlook. Not so with hunter's bump itself, however, as it can mean the horse is in pain - massage helped my old horse, made his bump look less pronounced, so it might be worth looking into for your horse.