I was recently asked to provide a definition of "Grid" for the layman. I wrote a piece a while back on "what is the grid." I still like that definition--although I've also decided that trying to define such things is a hopeless task. But here goes another attempt.
Having bought a new toaster, we simply plug it in: the electric power grid obviates the need to also buy and install a new generator. By analogy, information technologists refer to "the grid" when talking about on-demand computing.
Like its namesake, a grid is a mix of technology, infrastructure, and standards. The technology is software that allows resource providers (whether individuals or institutions) to federate computers, storage, data, networks, and other resources, and for resource consumers to harness those federated resources when needed. The infrastructure comprises the physical hardware and services that must be maintained and operated for this resource federation and access to occur. Finally, standards codify the messages that must be exchanged, and the policies that must be followed, to achieve those goals.
There is a subtle but important distinction between "a grid" and "the Grid." Any system that allows for resource federation and on-demand access is arguably a "grid", whether general-purpose or application-specific, small or large. The Grid, like "the Internet", denotes the global set of computers that speak the same protocols. In that sense, "the Grid" is a work in progress, as relevant standards continue to be codified and adopted.