Penetration is a panel data measure. It is the % of households that have purchased a product, or shopped in a certain channel or retailer. Higher is better and 100% penetration is as good as it gets. In Nielsen the fact is called Item Penetration (for specific categories/brand/products) or Shopper Penetration (for channels/retailers). In IRI the fact is % Households Buying.
If annual penetration of Brand X in the New York market is 56%, it means that 56% of all households in the New York market purchased Brand X at least once during the year.
Sales = (Total # of Households x Penetration) x Buying Rate
Reference articles: Data Dictionary, The Panel Chart Every CPG Analyst Should Understand.