Modularity refers to the ability to dissect new media into its most basic form and still be part of a larger fractal structure.
The structure of a web page for instance, contains many elements that can be manipulated. Images, text, movies all are stored seperately but function as a whole.
Think of each element as a capsule(module) they each function seperately and jointly.
A fractal structure is a good representation of what it means to be modular.