It is the arrangement of the matter of its body so as to allow it to carry on all of the peculiar functions of living organisms. These are the different functions which the souls of different organisms fulfill. They are not parts of the soul, but different powers which organisms organized by a soul or form of the right type can exercise. Humans are rational animals. This determines what our final goal or purpose is.
Reason is the ability to separate form from matter in abstract thought.
For example, when I think of a table, I have the form of the table in my mind, but not the wood or matter. Thus, reason is the one way we can separate form from matter. Our final goal, then, is to separate our form from our matter and become like God, pure form or thought. We do this by developing our reason through the speculative life.