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It is the evil enemy to digital photographers. Essentially, it amounts to distortion or breaking up the pixel from a variety of reasons. Artifacting can originate from heavy compression as in JPEG or from interference or noise from the sensor or even optics themselves. When artifacting occurs, the image appears to lose definition and may look chunky.
One of the most common reasons for artifacting in digital files is compression and recompression that occurs when using JPEGs. A JPEG is lossy compression by definition. Significant and random data are thrown away when saving a JPEG. Anytime a user sees the JPEG quality box in Photoshop, there will be data loss when the image is saved. Even something as simple as changing the name of an open JPEG will produce data loss. Essentially when using JPEG you are losing the original and that can be a major problem. A significant factor in using the JPEG format is to understand that information is lost when a file is compressed.