The discreteness condition means that there is some positive real number ε, such that for every translation T in the group, the vector v has length at least ε (except of course in the case that v is the zero vector, but the independent translations condition prevents this, since any set that contains the zero vector is linearly dependent by definition and thus disallowed).
The purpose of this condition is to ensure that the group has a compact fundamental domain, or in other words, a "cell" of nonzero, finite area, which is repeated through the plane. Without this condition, one might have for example a group containing the translation T for every rational number x, which would not correspond to any reasonable wallpaper pattern.
One important and nontrivial consequence of the discreteness condition in combination with the independent translations condition is that the group can only contain rotations of order 2, 3, 4, or 6; that is, every rotation in the group must be a rotation by 180°, 120°, 90°, or 60°. This fact is known as the crystallographic restriction theorem, and can be generalised to higher-dimensional cases.