A Phyrexian germ is a vat-grown, embryonic Phyrexian being that has been that has been gathered from its birth vat before growing past its larval state. It's similar to a newt, for those who know something about Phyrexia's backstory; normally, Phyrexian embryos grow to a certain level of maturity in the vats, and then they're extracted before finally being "compleated" with various biomechanical enhancements to become a full Phyrexian. Germs, on the other hand, are harvested from the vats in their premature larval state and are put to other purposes immediately.
The immature germs are not fit to survive on their own outside of the protective gels and vein-cables of the vat environment; their exobodies are soft and their parasitic organs haven't been congealed with the proper balances of Phyrexian oil and adaptive fluids. But if they're put in symbiotic relationship with a particular kind of biomechanical Phyrexian body part, they become a living weapon capable of autonomous action. Each half gains something out of the arrangement—the artifact gains a semisentient "pilot" that's able to operate its limbs and sinew-pulleys, and the germ gains an insulated housing that lets it survive for long periods without so much as a fluid umbilicus!