Steampunk is a catchall term for a genre of speculative fiction that often concerns itself with alternative history. Alternative History means that steampunk orients around a moment in actual history where events diverge from historical fact and this fictional divergence then forms an alternate reality. A key factor in the success of a steampunk world is the internal consistency. If a world presents an alteration of history it has to be continuous and true to itself.
Steampunk has gained prominence as a genre and expanded into the popular imagination since the 1980's and 1990's. Various movies have been produced in the genre (Venae puts in City of the Lost Children as a suggested title) (though many are considered exploitative of the genre rather than IN the genre per se). Additionally various games have taken the theme and run with it. Some games include: Penny Arcade Adventures: On the Rain-Slick Precipice of Darkness, Steel Empire, Final Fantasy VI and many others.
The term steampunk derives from the fact that in most steampunk fiction steam power is still in wide use in the fictional worlds it covers. Inventions, gadgets, steam and steel are often butted right up to rural or pastoral scenes. This juxtaposition draws heavily from the British Romantic poets and their critique of the effects of the industrial revolution on the countryside. Images of fields and rolling hills are contrasted with the smoke-stacks and soot of the cities. This shows some of the impact that our lust for work has on our environment, and can be seen as proto-environmentalist. Unlike the environmentalist movement however, steampunk worlds show how society has embraced technology, whether for good or ill.
Another important feature of steampunk is that technology is transparent. Unlike our world where technology aims for sleeker, more streamlined and "magic" devices (read: apple recently asserted that "magic" was going to be the factor that assured market share for the Ipad), steampunk embraces technology that is large, loud, and easier to watch working. Gears, steel, brass, smoke, steam, the coughing belching sneezing technology of the past is celebrated almost as an appeal to a bygone age made manifest for us today.
The genre often takes from the 19th century or earlier. Literary works by such authors as Jules Verne, Mary Shelley, and Mark Twain are often a good grounding on the principles that underlie the steampunk genre. Industrialization and the fears of its effects on humanity often play a major role in these authors' works. Steampunk is not often strictly dystopian, however, there are usually characters who abuse technology and science to the detriment of people. The heroes of steampunk will often be those who crusade for science for its own sake, rather than for profit or other material gain.