The settlement permit is a residence permit as defined in the German Residence Act (§ 9 AufenthG). Citizens from non-EU countries generally require a residence title (or permit) to enter and stay in Germany. Unlike the residence permit, the settlement permit is open-ended and grants the bearer the right to work. To obtain a settlement permit, a person must generally have been in possession of a residence permit for five years and meet a number of other requirements.

Quelle: Bundesministerium des Innern, Wikipedia, redaktionell bearbeitet (only available in German)