Undead is a term for creatures that are animated but not really alive -- usually they started out alive, then died, and then were somehow re-animated while not properly regaining life.
The exact mechanism of this re-animation depends on the setting; in fantasy worlds, there may be some abstract "negative energy" (as in Dungeons & Dragons) that can animate flesh that is no longer alive, while science fiction tends to invoke chemicals, electricity, or more advanced concepts like nanomachines that restore some semblance of life to dead creatures.
Though they may be capable of moving, and in some cases talking and thinking, the undead usually lack some characteristics of living creatures. For example, they may lack a heartbeat, or be cold to the touch, as their bodies no longer possess (or require) a metabolism. They are also sometimes said to lack a soul, which can manifest itself as being unable to cast shadows or reflections, as if they are lacking some substance required to do such things. Unquenchable hunger and thirst (especially for blood, souls, or other substances associated with life) are also common symptoms.
Historically, undead were seen as abominations; creating life from non-life was strictly the province of God or the gods, and mortals who intruded on that domain were evil, as were the fruits of their efforts; also that they're not genuinely restored to life, just an inferior and/or corrupt imitation of life. Over the last couple hundred years, opinion has shifted slightly; people who create undead, like necromancers, are still usually regarded as evil, but the undead themselves are usually at least pitied for having once been human and then made into monsters against their will.
Nevertheless, relations between the living and the undead are usually adversarial. In settings where undead are animated by "negative energy", they are usually automatically evil, with whatever intelligence they possess bent towards satisfying their hunger and becoming more powerful. The good-aligned undead like ghosts and necropolitans are unusual. Undead may be harmed by holy energy focused by clerics, or by any "positive energy" of any kind (e.g. healing potions or items).