Atomic Swap is a cryptographically powered smart contract technology that enables two parties to exchange different cryptocurrencies/tokens without the risk of one part defaulting on the trade.
In other words, Atomic Swap is the ability for two users to exchange cryptocurrency from different blockchains in a completely trustless manner. Each user will agree to terms before the transaction. The exchange is performed instantly, with no transaction fees and removes the need for a centralised party or exchange service to complete the transfer on behalf of the buyer/seller. This allows for a user holding Bitcoins to exchange with a user who has Litecoin or any other coin that has activated Segwit.
With the activation of Segwit, atomic swaps are now available for Bitcoin and Litecoin. Popular examples of executed atomic swaps are Bitcoin to Litecoin, Litecoin to Decred. Moreover, Altcoin Exchange made an atomic swap of Bitcoins for Ether.