In Lois Lowry's book Gathering Blue, the fact that Matt does not know what "gift" means is significant is because it demonstrate Matt's background and upbringing (or, rather, the lack of it.) By showing where Matt come from, the author highlights the transformation Matt goes through to become the type of person he is at the end of Gathering Blue and in its sequel, The Messenger.
Matt and Kira, who is the main character in Gathering Blue, live in a village in primitive conditions. The villagers have to work very hard to survive, to provide food and maintain shelter for themselves and their families. While sometimes they have to cooperate and work together to accomplish some tasks for everyone's benefit, ultimately the people in the village view each other as competitors, if not enemies - if one gets more, the other one gets less.
Matt comes from particularly impoverished section of the village, the Fen. Kira was raised by a loving mother who put her needs first, but in the Fen, even the parents compete with their children for food. There, the children are a burden, and relationships such as friendship are non-existent. Therefore, Matt has no clue what a "gift" is - he has never seen anyone giving to another without expecting something in return; he does not even know that such a concept exists. However, when Kira explains it to him, he is fascinated.
Because of the friendship that develops between Matt and Kira, who looks out for him, Matt's emotional needs, which he did not know he had, become fulfilled. Eventually, Matt travels all the way through the forest to look for another village where, he heard, "they know how to make blue" - to bring Kira "the blue" as a gift.