When a structure is loaded, it deforms:
x -> x + Δx
y -> y + Δy
z -> z + Δz
Typically, the applied loads move with the deforming structure.
In linear elastic analysis using small deformation theory, we assume the displacements are much, much smaller than the initial geometry. It is assumed that the displacements are negligible, and we ignore any load / response changes induced by the deformations, such as moment amplification due to the PΔ effect.
E.g. if you apply an arbitrary load set to a simple portal frame, including a vertical load at one of the "knee" joints, that vertical load will not induce a bending moment in the vertical column below the knee. However, if the portal frame sways (as it will under most arbitrary loading conditions), a moment will be generated in the column due to the vertical load multiplied by the column displacement eccentricity. The induced PΔ moment will tend to lead to larger sway displacements than are calculated using small displacement theory.
In small deformation theory, such effects are ignored; in second-order analysis using large displacement theory, the solution is iterated using the structure's displaced geometry until equilibrium is obtained.