Gamification is the infusion of game mechanics, game design techniques and/or game style into anything.
Bing Gordon Gamification
Bing Gordon, partner at Kleiner Perkins, talking about the importance of Gamification.
Gamification typically involves applying game design thinking to non-game applications to make them more fun and engaging. A few simple examples are things like earning points and setting goals with Nike+ to motivate yourself to exercise more, and Turntable.fm, the site where you can virtually DJ for your friends and random strangers — earning points based on your performance which allows you to unlock cool new avatars to show off your skills.