Take 20 refers to the ability to assume the best possible roll when attempting to use a skill. (The name comes from higher rolls being better than lower, and from the use of a d20 for skill checks, hence a "20" being the best possible roll.) This simulates a character's ability to take the time required to perform the skill well. In principle, this should encompass multiple attempts, some of which fail, but NWN treats taking 20 as a single attempt, and the time and resources consumed reflect this. (For example, only one healer's kit is consumed when taking 20 on a heal skill check.) Essentially, taking 20 in NWN means replacing a die roll with a fixed value of "20".
Taking 20 is handled automatically by NWN. When not in combat, characters "take 20" whenever they use the animal empathy, disable trap, heal, open lock, and set trap skills. When in combat, characters with the skill mastery feat "take 20" whenever they use the disable trap, open lock, and set trap skills. (These are the only times a character is allowed to take 20.)