What does "lap time" in car racing mean?

May be...

It is the time taken by the car to pass the start/finish line 2 successive times.

--------------------------------------...
http://f1gator.blogspot.com

the time taken by an object to reach a point on the path designated to it,the point usually being the point it started from, following the designated path.

the time it takes to do one circuit of the track

Lap time refers to the time it takes for the racers to finish the lap they are in, depending on the length of the course they are using(1/2 mile,1 mile)it can take anywhere from 2 min to 5 or more minutes per lap depending on the car/driver.

ummm.. the time it takes to do a lap.... or the time it takes for the fast red car to zoom around the big circle

It is the time period in which the driver crosses the Start/finish line twice.
Kimi Raikkonen lap around Spa (Notice the timer below)
http://www.youtube.com/watch?v=M97ZqFLqh...
The lap is divided into three sectors so Different times can be compared throughout the lap and make it easier for the driver and the team to know where do they lose and gain time.
Each lap the driver does around the circuit is recorded and compared officially (Fastest lap in race, Pole position in qualify) except:
1- First lap of the race
2- In-lap The lap in which the driver enters the pits.
3- Out-lap The lap in which the driver leaves the pits.
4- A lap on which the driver had cut the track.
All of them are recorded but not officially considered.antler-laptop-cases