In printing, bleed is printing that goes beyond the edge of where the sheet will be trimmed. In other words, the bleed is the area to be trimmed off. The bleed is the part on the side of a document that gives the printer a small amount of space to account for movement of the paper (known as drift), and design inconsistencies.
Standard bleed through-out the print industry is 1/8" (0.125 inches) or 3mm. That is to say that your artwork must extend past the cut line by at least 3 millimeters. On our templates red is the cut line, and the grey area is bleed. So your artwork must cover not only your product, but also the grey area beyond the product.