Comment by smilliken
"Derivation" refers to the nix intermediate build artifact, a .drv file, which contains the instructions to perform the build itself. Basically a nix program compiles to a derivation file which gets run to produce the build outputs. The hash in the /nix/store for a dependency is the hash of the derivation. Conveniently if the hash is already in a build cache, you can download the cached build outputs instead of building it yourself.
Ah OK, then I'd actually never actually understood what a derivation is. But then again, the name "derivation" doesn't at all lead to guessing at such a definition, either.