According to Merriam-Webster, segmentation is "the process of dividing into segments" and a segment is "a separate piece of something; a bit, or a fragment." This is a rather broad definition which suggests that segmentation is nothing mystical -- it is just taking a whole and partitioning it into pieces. One can segment sentences, time periods, tasks, inhabitants of a country, and digital images.
Segmentation is a term that often pops up in technical fields, such as Computer Vision. I have attempted to write a short article on Knol about Image Segmentation and how it pertains to Computer Vision. Deciding to abstain from discussing specific algorithms -- which might be of interest to graduate students and not the population as a whole -- I instead target the high-level question, "Why segment images?" The answer, according to me, is that image segmentation (and any other image processing task) should be performed solely assist object recognition and image understanding.