You might hear "Identity" thrown around in many contexts. Could be your favorite sports team, or celebrity.
Here we're talking Business identity.
It starts with the logo, but really encompasses everything the business is about, from value proposition to values.
The logo is the mark of the business. It is what the world uses as a "name tag" of sorts. If used properly, it comes to represent all that a company stands for, from their philosophy to their approach to their products and services. The mark grows in value over time as more and more people associate it with the ideals of the business.
Smudged Graphics designs not just a logo, but an identity package that defines a brand, and includes the styles and usage for that logo so it can increase in value and gain credibility with potential customers.