When Marx talks about alienation, he means that people will be alienated, or split apart from, things that ought to be theirs. In particular, he is talking about how people will lose control of their work and even their whole lives.
Marx says that capitalism alienates workers from control of their work and their lives. Before capitalism, workers would work for themselves. They would decide when and how to work and they would get the fruits of their labors. With capitalism and industrialization, workers became no more than pieces in a machine. They no longer had control of where and when and how to work. Instead, they simply did as they were told.
In this way, they are alienated, or separated, from something (the control over their work and their lives) that they ought to have.