It's a command, often used in contexts like:
* At the doctor's: A doctor might say this when examining a patient's throat.
* When singing: A choir conductor might use this phrase to tell the singers to open their mouths wide.
* For a photo: A photographer might ask someone to "open their mouth" for a more expressive photo.
It can also be used figuratively to mean "speak up" or "tell me what you think."