Mac OS X Activity Monitor - what does "CPU Time" tell me?

You have lots of applications running in "parallel", competing for system resources, such as the CPU. CPU time tells you how long a particular process has actively used the CPU while it's been running.

Imagine a process constantly using 10% CPU, and running for 20 minutes. In that time, it will have used roughly 2 minutes of CPU time. If a process is computationally expensive, CPU time will rise much faster, since more "real time" will be spent by CPU on that particular process.

Yes, it is "Is it the accumulated time the process has run", and by "run" you mean "actually used the CPU". If you saw it jump and then stagnate, that means the process used the CPU for a few seconds, and then either stopped needing it, or was moved away by the scheduler while other processes used the CPU.