A settlement price is the exchange's official mark for a contract for that trading day. It is the number that margin is calculated against, that a physical deal referencing the exchange will use, and that every chart of daily closes is built from. It is the most authoritative single number the market produces about a contract.
It is usually not the last trade. For the major crude contracts the settlement is a volume-weighted average over a defined closing window, commonly two or three minutes, rather than a single print. Averaging over a window is deliberate: a single final trade is a small target, and a market whose official mark could be set by one lot at the bell would invite exactly that.
Contracts further out on the curve may not trade at all during the window. The exchange still has to publish a settlement for every listed month, because margin has to be computed on positions in all of them. Those far months are settled from the tradeable spread market instead: if the M12-M13 spread is quoted even though neither outright trades, the spread plus a nearer settled month determines both. This is why a deferred contract can print a change on a day it did not trade, and why the far curve is smoother than the near curve.
Settlements are what make the daily series usable. They are struck by the exchange on a published methodology, they are the same number for everyone, and they are revised only in rare and announced circumstances. On petral's reliability scale that earns them the `settlement` tier, the highest one, and it is why a spread computed from two settlements can honestly inherit that tier while a spread between a settlement and a survey estimate cannot. See reliability tiers.