This article is from the RSC/UKSC Cricket FAQ, by Ganesh with numerous contributions by others.
Yard is a measure of length. Pace is speed. So
how does an "extra yard of pace" make sense?
Contributor(s): Mike Holmans, Jackie Hewitt and others
The popular explaination that if two bowlers bowl at the same
batsman, the ball of the one a yard faster will arrive at the bat
whilst the slower bowler's ball is still a yard away is an adequate
but not quite completely kosher explaination. The extra yard
travelled in the same reaction time is from the keeper's and not
batsman's point of view.
It refers to how far further back the keeper and slips have to
move back in order to feel comfortable about taking the ball.
If a bowler had gained a yard of pace, it meant that the
keeper found he had to stand a bit further back. If he'd
"gained two yards", the keeper was standing a lot further back.