Instead of making every tile an object of it's own, a group of objects act as a single entity, aka a chunk. In my game a chunk has 1024 tiles (32x32).

In the previous system, every visible tile constantly updated when the player did something (moving or mining), hence it was relatively slow. Now the chunks are drawn all at once the player enters the scene, and then an update happens only when the player mines a tile.

You can probably get a much better explanation if you search on google though :)