Hashtag, in simple English, is any word that begins with a hash (#) symbol.
Hash-tags are popular on Twitter because writing space is limited but people can associate their tweets with an event (or product) without having to explain the full context.
For instance, a tweet that says “Obama on stage now” might make no sense but if it includes a hash tag like “Obama on stage now #whcd” - it’s relatively easy to guess that the person is probably live-tweeting from the White House Correspondents’ Dinner.
Most #hashtags have pretty obvious meanings (like #teched or #xkcd) but if you are not too sure about the meaning or origin of any particular hashtag, check out tagdef.com.
Tagdef is a directory of Twitter hash tags that displays the meaning along with recent tweets that have included that particular #hashtag. If you aren’t happy with the existing definition, you can write your own and others can vote up (or down) your definition.