A common data environment is the agreed single source of truth for project information: the platform and processes through which documents and data are shared, reviewed, published and archived.
A CDE is as much workflow as technology. Information moves through defined states (work in progress, shared, published, archived) with controlled naming and revisioning, so every party works from the current information and the history is auditable.
A well-run CDE prevents the classic project failure of decisions taken on superseded drawings, and it underpins the record you will rely on if the project ends in dispute.