A wiki is a website where the users can edit any page within a few seconds. If you don't believe me, click on the "Edit" link somewhere on this page and read OneMinuteWiki.
The word "wiki" is short for "wiki wiki web" which translates to "QuickWeb" describing pretty good what the wiki is all about.
It's easy for the users, because they don't need to know HTML. It's cheap for the owner, because the software is simple and doesn't need expensive administration or moderation. Everything is done by the users.
A wiki is great for any kind of collaboration over the web. Want to read this in a book? ISBN 0-201-71499-X ("The Wiki Way: Quick Collaboration on the Web", by Bo Leuf & Ward Cunningham)