Keyword Indexing is whether a store has registered your app as eligible to appear for a given term — if a keyword isn't indexed, you can't rank for it no matter how relevant you are.
Indexing is the yes/no gate that comes before ranking. The store builds the list of terms an app can surface for primarily from its metadata — app name, subtitle, and keyword field on iOS; title and descriptions on Google Play — plus a handful of automatic associations like your developer name and in-app purchase names. A term you never placed anywhere usually isn't indexed, so the app is invisible for it even if it's the perfect match.
The practical takeaway: ranking work only applies to keywords you're indexed for, so coverage comes first. Get the right terms into your metadata to become eligible, confirm the app actually appears for them, and only then worry about climbing the results. Apps often discover they're "losing" to a competitor for a keyword they were simply never indexed for in the first place.
Example
A recipe app wonders why it never shows for "meal prep" — the phrase appears nowhere in its metadata, so it was never indexed; adding it to the keyword field makes the app eligible to rank within the next refresh.