Sectors are points of interest on The Map and Game World.
Each galaxy (normal space and The Rift) is represented by a grid of 80x80 sectors, for a total of 6,400 sectors per galaxy (and 12,800 sectors, overall).
Sectors can be moved between by using a ship's Jump engines.
Although the game Map is displayed in 2D, it is actually a representation of 3D Space. Sectors aren't even necessarily equally distant apart, but rather points of interest within the galaxy that can be (easily) jumped to by a ship's Jump Drive.