Social facilitation is a phenomenology of behavior. It entails the tendency of human behavior to become altered in the presence of other people. First proposed in the published article "Social Facilitation" in Science magazine by Robert Zajoncin 1965, Social Facilitation theory argues that all behavior is directly affected, both positively and negatively, when tasks are performed in the presence of others.
The particularity of this theory is that when the performance involves a relatively simple and manageable task, it (the performance) will be better and more improved than when the subject is performing alone. This is, in part, due to motivation: whenever peers are performing the same task, those who can master it will want to outdo the others. Similarly, when a good performer is being watched, the motivation that comes out of being watched moves the subject to perform even better.
Contrastingly, when the subject is performing a task that is hard to maneuver and control, the same presence of peers will negatively impact the performance to a point where it will increasingly worsen. The peer pressure, personal frustration and stress are factors that will influence such behavior.
Social facilitation is evident in athletics; when a good athlete is in the presence of his teammates, his followers, his coach, and all the people directly involved with his talent there is no doubt that the athlete will perform with much more brilliance than when he is training alone. Similarly, when a team is losing a game, and feel as if they are not performing well, the pressure of being observed and pushed to win will render them even more weak and unable to catch up to their original skills.
Another example happens in competitions of any kind. Those who feel "at the top of their game" and well-prepared to undertake the challenge will perform better precisely because they know that they will be watched, and that there will be peers performing as well.
For instance, a cook who enjoys her vocation is suddenly presented with a chance to be on TV and participate in a competition against other cooks. If the cook trusts her skills, she will take on the challenge and excel at it. If the cook does not trust the skills and enters the challenge anyways, the performance may go from bad to worse in the particular scenario of a challenge; maybe after the challenge the cook will realize that her cooking was no different than the cooking of the best chefs, but that the level of confidence just was not there.
Hence, the reason why this is called "social facilitation" is because a task is made either easier or more difficult when socialization is a factor.