NVT Ratio (Network Value to Transactions Ratio) is similar to the PE Ratio used in equity markets.
When Bitcoin's NVT is high, it indicates that its network valuation is outstripping the value being transmitted on its payment network, this can happen when the network is in high growth and investors are valuing it as a high return investment, or alternatively when the price is in an unsustainable bubble.
Bitcoin's NVT is calculated by dividing the Network Value (market cap) by the the daily USD volume transmitted through the blockchain. Note that this is the equivalent of the bitcoin token supply divided by the daily BTC value transmitted through the blockchain. Thus it is technically an expression of inverse monetary velocity.
In the chart above, the thin brown lines depict the raw values, while the solid brown line is a moving average to smooth the results. I've used a 28 day moving average, 14 days forward facing and 14 days backward facing, in order to not introduce needless lag to the resulting line.
Data for Network Value and the USD value transmitted via Blockchain.info. Note the value transmitted on the blockchain is an estimation.