To "identify" terms means to determine whether or not the terms mean the same thing. (Thanks to @amd)
The book talks about "convertibility" being the basic equivalence relation on λ-terms. If M, N are terms and M = N then M and N are called convertible. I think that also means that M and N have been "identified". Furthermore, all terms in the equivalence class containing M (and N) have been "identified", i.e. mean the same thing.