The concept of rhythm can apply to many parts of your writing. On a sentence level, the way the words fit together and how they sound can create a certain poetic cadence. But rhythm goes much deeper.
Short sentences convey urgency. Look! The shorter the sentence, the more urgent the feeling. The incomplete nature of sentence fragments, like the one you just read, creates a quickening of the pace as well. If you are writing a dramatic scene, short sentences hurry the reader along. Longer sentences create a more laid-back feeling, taking away some of the urgency. Consider the following example:
Jessica gasped as she watched the man walking toward the house. She ducked low behind the hedge, being careful not to be seen, and tried to remain quiet so as not to attract the man's attention. She thought that she could see the hint of a knife in his hand, but she wasn't entirely sure.
Now, look at this:
Jessica gasped. She shifted her position, covertly cowering behind the hedge. She watched the unshaven man approach. She was close enough to catch his scent. It wasn't pleasant. She could see a glint of shiny metal. Was he holding a knife? She couldn't tell.
Which example made you feel more tense? The rhythm of the scene is dictated by the objective you're trying to accomplish. If you want the reader to feel nervous and scared, then short sentences with lots of action are the way to go. As you write, consider the rhythm of the scene and make sure that you're not making things less interesting for the reader along the way.