The most prized possession or achievement.
Also a reference to colonial India. India was the British Empire's most important colony: the most populous, the most valuable, the most strategic.
Using "jewel in the crown" to refer to colonial India can also be a play on words about a real crown jewel -- the Koh-i-Noor Diamond, a large precious stone. The Diamond was taken after the defeat of the Indian Punjab by the British East India Company and subsequently mounted in the crown of queens of the British Empire. The current Queen Elizabeth II, aware that wearing the jewel offends many Indians, displays the Diamond in the Tower of London.
Because of the weight of the colonial heritage of the phrase, care must be taken when using the phrase to avoid being racist or insulting. If you lack understanding then it is best to avoid the phrase.
The phrase is often used in a jingoistic fashion in English tabloid newspapers, a recollection of the glory days of the British Empire.
The "Jewel in the Crown" is the title of the first of four books written by Paul Scott in 1966. The books are set during the closing decades of the British Raj. In 1984 these books were made into a television mini-series which was acclaimed for its high quality. Both works have a complex and unsentimental view of colonial India, making the title intentionally ironic.
With both jingoistic and ironic uses of "jewel in the crown" being common, readers should consider in what sense the phrase is meant.
Benjamin Disraeli, Prime Minister of Britain, is said to have called India "the brightest jewel in the crown of the British Empire".