As you can probably tell, Sensor Size is the Size of the Sensor! There are many different sensor sized cameras in the market but the current most popular sensor sizes are Full Frame, followed by APS-C and a niche following of MFT(micro four thids).

A smaller sensor size on the same focal length basically means a crop into the photograph. For example, MFT has a 2x crop compared to a full-frame sensor. If you wanted a 50mm Full Frame field(angle) of view you would need to use a 25mm MFT lens as it would have a 2x crop in the equivalant field of view. HOWEVER, the focal length is 25mm, therefore, mft would appear to have a deeper Field of View(less background blur)

In order to understand this better, I have created a diagram for a better visual understanding. The top example is MFT and the bottom is Full Frame.

See how they both have the same field of view, yet the FL(Focal Length) is 2x for full frame because Full Frame has 2x the size of MFT's sensor size. This feature allows MFT to have a better reach and Full Frame to have better background blur; it is important to choose the right sensor size in different scinarios.