Sanders and Clinton are competing for the chance to run as the Democratic candidate. Similarly Cruz, Trump and 10 others are running for the chance to run as the Republican candidate. Its customary that the losing candidates will get behind the winner and endorse them, uniting their party behind a single person after a divisive primary campaign.

However, Trump doesn't see it that way. He feels that if he doesn't get the nomination, he will run as an Independent candidate. He doesn't stand any actual chance of winning but he would claim some of the Republican votes (say 5-10%) on election day, making it a cake-walk for the Democratic candidate.

Why would he do this? Its blackmail. There's a good chance the heads of the Republican party would sabotage his campaign because of how unsuitable he is. This threat keeps them from doing that, because they would bury their party's chances in 2016.

I think the idea is that Trump would take enough of the conservative side of the vote that even if moderates tended to vote for Cruz (as Sanders is thought to scare moderates) it could be close between Sanders and Cruz.