AMD Fusion is a code name for AMD’s series of accelerated processing units (APUs), which combine the functions of a multicore CPU and a discrete DirectX 11-capable graphics card into a single die - an APU. This gives devices powered by the CPU greater processing power, especially in terms of graphics.
This design greatly reduces power consumption by doing away with a lot of the components on the motherboard that are used to link the CPU and the GPU. Instead of powering a CPU, a GPU and everything in between, the Fusion device only needs to power a single efficient chip. This also removes the bottleneck that is caused by the other components used in GPU-CPU communication.
Techopedia explains AMD Fusion
The Fusion APUs are designed for parallel processing, making graphic-rich applications run faster and more smoothly. By combining the capabilities of a multicore CPU and a discrete GPU in a single processor package, higher performance with low power consumption is achieved, making this technology ideal for small form-factor gadgets like netbooks and tablet PCs.
AMD Fusion was first announced in 2006 and the first products containing this technology came out in early 2011, mostly desktops, notebooks and HD netbooks. Products containing the Fusion APUs do not have a Fusion sticker, but are labeled under the Vision brand, as this is the company’s external naming convention for devices that contain the Fusion APU. AMD Fusion is an internal naming convention.
AMD Fusion is developed as a result of the AMD's aquisition of the ATI.