The sweet spot of an attack is the area of the hitbox with the most desirable knockback effect - usually, the most powerful part of the attack. For example, the sweet spot for most of Roy's attacks is the area of his sword closest to his body, while Marth's is at the end of his blade.
The term sweet spot can also be used the describe the action of grabbing the ledge as soon as one's recovery move is over, making it much harder for one's opponent to edgeguard them.
Sweetspot can also be used as a verb, i.e. "He sweetspotted the ledge."