What does 'consolidate' mean in iTunes...?

I'm having trouble syncing my iPod to iTunes since having to do a system recovery on my laptop... I'm wondering what the 'consolidate' tool will do with my music... I don't want to lose my music, and I don't think I shoud have to pay for music that I purchased on disk to be transfered back to my laptop. I've look through other tutorials and questions and no one has actually answered this question successfully. I have 526 song that I have ripped from albums I own and I don't want to lose them, if you can give me a solve to this problem that works I would be very grateful.