Commonly, it refers to one of three things: music, lifestyle, and fashion, though it is not seen as proper to designate one's self as goth based purely on their manner of dress, and most goths do not publicly proclaim themselves as such anyway. The gothic subculture tends to have a poor reputation because so many of the people who choose to label themselves as such know nothing about the culture, and involve themselves in juvenille or melodramatic behavior that they feel "is goth".
Musically, it refers to an alternate form of rock that first developed in the late 70's as a post-punk form of music. This early, guitar driven form of goth is commonly called "death rock". The guitars often serve as an ambient rather than melodic instrument, drumming tends to be dance oriented and the vocals are often somewhat haunting or distant. Lyrics deal heavily with introspection, nilhilism and the occult, though most assume it deals strictly with satanism. Many gothic bands mix industrial elements into their music, leading some to believe that all industrial music is gothic. Common bands associatdd with the term include The Cure, Bahaus, 45 Grave, Sisters of Mercy, Joy Division, etc.
Lifestyle-wise, there doesn't appear to be a lifestyle that all gothics follow, though some seem to share similar characteristics, which can include an interest in occultist themes, poetry, religion, introspection, gothic literature (which was written some time during the Victorian Era), folklore, etc. Most gothics are known for regularly attending dance clubs that play gothic and industrial music, and some are also known for their interest in the S&M culture.
Fashion-wise, there tends to be a lot of accessories, and the most common of which are victorian/medieval inspired (velvet and lace, pirate shirts, corsets, etc.), bondage inspired (slave bracelets, chokers, large boots, fishnet and mesh clothing, clothing made out of PVC, leather, rubber, latex or vinyl), or punk inspired (bondage pants, leather jackets, spiked or studded jewelry). Gothics have a tenendency to wear mostly black, though sometimes white or red, and have their hair dyed, usually purple or jet black (the hair is also stylized in a certain fashion, usually mushroomed out like Robert Smith of The Cutre, dreadlocked, or black with bangs like Emily (the mascot for a line of products of the same name), or other similar, outlandish designs. There is also a tendency for theatrical-style make-up (white foundation with black emphasis around the eyes and sometimes mouth). Goth fashion is sometimes mistaken for the on-stage presence of black metal groups.
Many think that bands such as Marilyn Manson and Nine Inch Nails are goth rock bands, but they're really just commercialized industrial music.