Now with new changes, improved frostbolt and improve fireball reduce the amount of spell damage you receive from your gear by 2% per rank.
So in your case, Mal, if you have 5/5 improved fireball, while you'll be casting faster, your +dmg gear will take a -10% hit. Only to your fireball though, not all your spells.
I guess to answer your actual question though: The co-efficient is the % of spell damage your spells receive which are based on things like base casting time, snaring effects and so on.
For example: if you have +100 spell damage gear and casting a base fireball, you'd receive the full damage as the co-efficient for fireball is 100%. Frostbolt, on the other has about an 80% damage co-efficient and therefore the same mage with the +100 damage gear would only be getting +80 spell damage.
I believe that should cover it. If I said things in an odd way and you're still confused, just let me know and I'll try explaining it in a different way.