What It Means
A market maker is a trading firm that continuously quotes both a buy price (bid) and a sell price (ask) for an option, so other traders always have someone to trade with. When you buy or sell an option on Nifty's option chain, the other side of that trade is very often a market maker, not another retail trader.
How It Works
Market makers profit from the small gap between their bid and ask price, not from betting on market direction. To stay roughly neutral regardless of which way the underlying moves, they constantly hedge their positions using the option's Greeks. They also widen or tighten their bid-ask spread and adjust quoted premiums based on current implied volatility and how much risk they're carrying on a given strike.
Warning
It's tempting to think you're trading "against the exchange" when you buy or sell an option. You're not. The exchange only matches orders; the counterparty on the other side of most trades is a market maker's quote.