Let me explain it by relating it to geographical boundaries. Boundaries are limits, perimeters or divisions that identify what area of property is owned by you or an area for which you are responsible. For example, there are usually measurements and property markers that determine what is your land, what is your neighbor's. Along with that, come certain rules or legal obligations, for example, your neighbor can't build his garage on your lot or you must keep your lawn mowed and your sidewalks shoveled. If someone would pitch a tent on your front lawn, you'd be angry or uncomfortable.
Boundary setting relates much the same to personal limits or perimeters.
We all have them and we all need them. We all know why the outside world has rules, boundaries and limits. If they didn't we would live in absolute chaos. Everyone would basically do what they felt was the best, without anyone looking at the whole picture. So, many boundaries set by our government, churches, and so on, are very good.