Source: Business Insider

The “Internet of Things” is described as:

“[a] network of physical objects—devices, vehicles, buildings and other items embedded with electronics, software, sensors, and network connectivity—that enables these objects to collect and exchange data.”

In normal speak it is a car with apps, kitchen appliances that you control from outside of the house and wearable devices that tell you how many steps you took today and then shares that data with your friends.

Here is a more detailed explanation in the form of an infographic: