Adverse selection is the tendency for a passive quote to be filled precisely when it is wrong. The counterparty crossing into your order is more likely to be better informed or faster, so the fills a market maker actually receives are a biased sample of the ones it offered.
This is why a market maker's realised profit is usually far below the quoted spread multiplied by volume. Detecting and withdrawing ahead of informed flow — rather than quoting wider all the time — is most of the skill in the strategy.
Reacting by widening quotes permanently. That gives up the revenue on benign flow without solving the problem; the skill is detecting informed flow and withdrawing, not pricing everyone as if they were informed.
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