It was originally used to describe a subgenre of hip-hop that gained popularity in the early 1980's in Germany, England, and the US. Electro was directly influenced by Kraftwerk and Funk, whereas earlier hip-hop was closer to disco. Defining characteristics of this genre were dominating synthesizer lines and rhythm sections comprised of drum machine beats, rather than samples. Vocals were delivered in a robotic, dead pan matter.
As time progressed, many subgenres grew out of electro, as well as a certain fashion sense and attitude. Foremost among these were electroclash (a hybrid of electro, new wave, and Italo disco) and electropop (a form of synthpop characterized by a cold, robotic sound). It is heavily debated among music scholars whether or not these are actual subgenres of electro. Electro is considered synonymous to this day with these two genres.
Electro also spawned more valid, genuine subgenres, including electro funk, electro bass, glitch electro, downtempo electro, and minimal electro. Electro also influenced freestyle music and Miami bass (in turn creating techno bass), and had a significant role in the evolution of ghettotech.
When someone refers to electro in modern times it is not likely they are referring to the original hip-hop style. Electro is commonly used as shorthand for describing music from the electropop revival and electro house scene. Electro was extremely influential, inspiring a myriad of subgenres, all of which could be considered electro. This makes it very confusing when trying to ascertain exactly what strand of electro a certain artist's sound fits into.
In general, many people use electro to describe all electronic music meant to be danced to, distinguishing it from electronica (electronic music meant for home listening).
Electro is used most accurately to describe the original strand of funk influenced hip-hop. Electro purists consider this the only valid definition.
These days, people are using the term electro to either describe "electro-house" (a form of house music that has a lot of fat basslines, 80's influences, etc), or even as a catch-all term for all electronic dance music in the same way some people erronously use "techno". In fact, with the recent wave of 80's influenced fashion and music, it's become trendy for any bar/club to claim they play "electro" meaning just about anything with electronic elements to it.
Bodyrox - Yeah Yeah (D Ramirez Mix) is an electro-house track, it has a beat similar to house and techno along with with a more minimal groove and a big synth line.
CSS, Hot Chip, etc are the kind of stuff that club promoters will palm off as "electro" because they're trendy and somewhat electronic.
Significant instruments are keyboards and synths, usually has lyrics. Often has an infectious bassline.
It kind of bridges the gap between trance and rock.
Hot Chip, Justice Vs Simian, LCD Soundsystem, The Klaxons, Shiny Toy Guns, etc.
Person 2: Really? I didn't know people still listened to that.
Person 1: What are you talking about? Haven't you heard of feed me or wolfgang gartner?
Person 2: That's electro house not electro.