Ligand binding is the process of a molecule binding to its target. This could be a substrate binding to an enzyme, an inhibitor binding to an enzyme, or an allosteric modulator binding to a receptor (among other examples).
The dissociation constant, Kd, is used to describe how strongly two molecules interact with each other. A lower value indicates stronger binding, and this is generally desired with drug molecules. Stronger binding gives a longer residence time, which means a lower dose needs to be administered. Lower Kd values also indicate better specificity of the drug molecule for its target, potentially giving fewer off-target effects (if there are no other targets that have an identical structure to the structure being targeted by the drug molecule).
Ligand binding is necessary for a drug to function, whether it interacts with a receptor, an enzyme, or a protein.