Cited Reference searching is the ability to search the list of references (or footnotes) found in journal articles, books, dissertations, websites, etc. It is based on the premise that you have a scholarly work in-hand that you really like and you want to see who else has used that work in their research - ergo, have included it in their list of references (or footnotes). Typically, cited reference searching involves looking for works by a particular author or for a specific piece.
What you're doing with a cited reference search is following an article forward in time and answering the question: "Who has cited this article?" This is an important piece of your literature review strategy. Looking at the authors who have used an article can give you valuable information about how that research has been used by other researchers.