An item is something that can do a lot of things to a Pokémon, the player or the environment and game.
Items can be picked up anywhere around a region, some can be found in Poké Ball shaped capsules lying around, some can also be found on trees, others are invisible and can only be found either using an, Itemfinder in Generation I - Generation III, by using a Dowsing machine in Generation IV or randomly pressing the A button to find it.
An example of an item is the Full Heal, which heals all status problems on a Pokémon.
Another example is Repel, which repels wild Pokémon away from the player for a set number of steps.
There are a few types of item.
Normal items can only be used once, such as a Potion, and can be sold or tossed away. Some do nothing, like a Nugget.
Key Items are things that the player needs, such as a Lift Key to get to a new place, or the Silph Scope.
Berries also count as items.
Pokéballs are also counted as items.
Items can also be registered for use with the Select button, from Generations I - III, which means that once the player has registered it through the Start Menu, and once the player presses Select, the item will be activated. In Generation IV D/P/Pt the registered button is Y, in HG/SS you can register one with the Y button and the other on the touch screen, It makes getting to the item('s) faster.