Pivot washers are thin discs that sit between the blade and the handle liners so the blade turns against a low-friction surface instead of against the frame. Most are phosphor bronze, PTFE or nylon.
Phosphor bronze is the standard on quality folders: durable, smooth once broken in, and tolerant of grit. PTFE washers are slicker when new but softer and more easily deformed by an over-tight pivot. Nylon appears on budget knives and wears fastest.
Washers are also what stops the blade rubbing the liners, which is what keeps the action smooth and the finish intact.
Washers are why a new folder often feels stiff and then loosens up. Bronze in particular beds in over the first weeks of use.
A drop of light oil at the pivot goes on the washers, not into the lock. If a knife develops gritty action, worn or contaminated washers are the usual cause, and they are one of the few genuinely serviceable parts. Compare bearing pivots.