A video usually with pictures, video clips, or both, with music and/or editing. They are commonly used to show skill (also can be used for enjoyment) in a video game, like Halo, Call of Duty, or Gears of War.
An example of a good montage that shows skill and is enjoyable, by a Halo-pro, Dave Walsh(Walshy). It has amazing game-play and nice editing which complements enjoyable, synced music. Copy and paste url to watch.