Affiliate marketing is a performance based marketing concept wherein a business, usually an e-commerce site, would reward an affiliate (like a Blogger for instance) for each client or buyer brought about by the marketing efforts of the said affiliate.
Simple Definition:
Sell or promote someone else’s stuff and get paid for doing it.
How it Works:
You have a blog or a website or an email list.
You know of a product or service you can confidently recommend to your readers.
You will partner with the company that sells this product or service.
You will market (i.e. tell others about) this product or service for the company that offers it. You have now become an affiliate(sometimes referred to as an internet , associate or affiliate marketer).