It is the energy of the dipole in the external magnetic field. The larger the external magnetic field and the larger the magnetic dipole moment, the larger the potential energy of the dipole.
When the dipole moment and the magnetic field are aligned in parallel, the potential energy is negative. When they are aligned anti-parallel, the energy is maximized and positive. And, if they are orthogonal to each other, the energy is zero.
Magnetic dipole moment is a measure of the strength of a magnetic dipole. A torque acts on a magnetic dipole in an external magnetic field \(B\), i.e. the magnetic dipole wants to align itself along the magnetic field. It has a potential energy in the magnetic field.
It is the external magnetic field in which the magnetic dipole is located. The larger \(B\), the stronger the external magnetic field, the greater the potential energy of the magnetic dipole.