[AvatarOfLight]

"Bard Song: This is possible by Bards - the bard character will begin playing a song, which continues until any action
other than movement is selected for that bard. While the song is playing, the party morale and luck is higher. The better
the bard (higher level), the larger the morale and luck improvement for the party. (Luck decreases attack rolls and
damage caused by enemies)."

Basically Bard Song gives your party a buff that weakens enemy attacks. Skalds' Bard Song gives attack bonuses to your party in addition as well.

You can find the Baldur's Gate 2 manual here:
replacementdocs: Downloads / PC (DOS/Windows) / Baldurs Gate II