This built in instance variable is used to hold a numeric value for the object lives (note that this is not necessarily always the case - just because it's called "lives" doesn't mean it has to be used for the lives... it can hold any real or integer value you wish for your game).
if place_meeting(x, y, obj_Enemy_Bullet)
health -= 10;
if health <= 0 lives -=1;
The above code checks the current instance to see if there is a collision with the instance of the object indexed in "obj_Enemy_Bullet", and if there is, it removes 10 points from the health variable and then checks this value to see if it is less than or equal to 0. If it is then the instance removes 1 from the lives variable.