A Japanese novel read as an game-like application on a computer. A term to distinguish itself from a "Game" because there is usually no gameplay involved, and the only interaction that the player can make with the game is making certain choices at specific points in the game that decides which branch of the storyline that the player will take.
Also distinguishes itself from an "eroge" or "hentai game" in that sex is usually the main appeal of a hentai game, but plot and story is the main appeal of a visual novel.
Anime-styled drawing most of the time. Some may contain sex scenes, and some are emotionally charged stories targeted at older audiences with a lot of plot and depth. The pros are that it usually comes with pictures, sounds effects, music and voices which gives one a richer experience than reading a plain novel. The cons are that it requires a lot of clicking of the mouse to scroll through the novel text.
Two visual novels, Kanon and Air won the best PC game of the year 1999 and 2001 respectively in Japan.