The inert pair effect describes the preference of late p-block elements (elements of the 3rd to 6th main group, starting from the 4th period but getting really important for elements from the 6th period onward) to form ions whose oxidation state is 2 less than the group valency.
So much for the phenomenological part. But what's the reason for this preference? The 1s electrons of heavier elements have such high momenta that they move at speeds close to the speed of light which means relativistic corrections become important. This leads to an increase of the electron mass. Since it's known from the quantum mechanical calculations of the hydrogen atom that the electron mass is inversely proportional to the orbital radius, this results in a contraction of the 1s orbital. Now, this contraction of the 1s orbital leads to a decreased degree of shielding for the outer s electrons (the reason for this is a decreased "core repulsion" whose origin is explained in this answerthis answer of mine, see the part titled "Why do states with the same $n$ but lower $\ell$ values have lower energy eigenvalues?") which in turn leads to a cascade of contractions of those outer s orbitals. The result of this relativistic contraction of the s orbitals is that the valence s electrons behave less like valence electrons and more like core electrons, i.e. they are less likely to take part in chemical reactions and they are harder to remove via ionization, because the s orbitals' decreased size lessens the orbital overlap with potential reaction partners' orbitals and leads to a lower energy. So, while lighter p-block elements (like $\ce{Al}$) usually "give away" their s and p electrons when they form chemical compounds, heavier p-block elements (like $\ce{Tl}$) tend to "give away" their p electrons but keep their s electrons. That's the reason why for example $\ce{Al(III)}$ is preferred over $\ce{Al(I)}$ but $\ce{Tl(I)}$ is preferred over $\ce{Tl(III)}$.