This was a post by Sixty Fiver on the Hybrid forum (I hope it's okay that I copied it). I think it sums it up pretty well

Hybrid: Something of mixed origin or composition

I like this article from Suite101.com

The hybrid bike was first conceived as a cross between the road bike and the mountain bike. And while it never worked as a mountain bike, and it can't really keep up with a road bike, the hybrid has become an interesting and dynamic design, spawning many sub-categories to satisfy a diversity of riders.

The Hybrid Bicycle Frame

Most hybrid frames are aluminum, making for light, durable, and affordable bikes($350-1600). Some manufacturers soften the aluminum ride characteristics with front suspension or, for a little more money, carbon forks. The geometry is generally lax, with a shallow head and seat tube angle and a relatively long wheelbase. Mounting fixtures for accessories should be plentiful, with bolt points for rear and sometimes front racks, extra water bottles, and fenders.

Hybrid Handlebar Styles

Most hybrids come with flat bars and mountain-bike shifters and brakes. The bars are wide, for maneuverability and control, and the hand-position is high, which lets the rider sit up and have a full, comfortable view of the road and surroundings. Often, the stem (the piece that connects the bars with the fork) will be adjustable.
Wheels and Tires for Hybrid Bicycles

Hybrid bikes can be built around a 26-inch wheel, which is a mountain bike wheel size, or a 700c wheel, which is the road bike size. In either case, the rim is usually designed to take a tire in the one- to one-and-a-half inch range. This is wider than a road bike but narrower than a mountain bike. Tire tread patterns vary from a road-specific smooth tread to a semi-knobby, cyclo-cross style. But most hybrids come with a combo tread, with a solid center ridge to reduce rolling resistance combined with a grooved side pattern for grip on wet roads or gravel. The bike shop will often swap tires at the time of purchase if the buyer prefers as different tread pattern.
Hybrid Bike Drive Trains

Most hybrids have a standard drive train of three chainrings in the front and eight or nine cogs on the rear cassette. Gearing is a compromise of road and mountain, leaning more toward road. Specialty bikes, often toward the higher end price-wise, may have only one or two chainrings or even be single-speed.

The Two Major Hybrid Set-Ups

Hybrid bikes broadly fall into two major groups:

* The Comfort Bike, probably the largest category of hybrid ($300-1000). It has a shock-absorbing fork and seatpost, an adjustable stem, and it is often set up to be ridden in an upright position with a cushy ride. This is good for long rides at moderate speeds on bike trails or flat roads, generally for the recreational rider. It's probably not for those who want to go out and "hammer" or climb long hills on a daily basis. Comfort bikes start aound $350, but it makes sense to kick up a level or two if one intends to ride often, say several times a week.

* The Fitness Bike ($400-1600, $2000-plus for a carbon frame and high-end components). A lower handlebar leans the rider forward into a more aggressive, efficient position, to facilitate more athletic pedaling. There are usually no shock forks or seatpost; the cushy feel of the Comfort Bike gives way to a faster, ergonomic ride. The fitness bike works well on paved and semi-paved bike trails, and it also rolls quite efficiently on the road and climbs decently. Some riders enhance this latter ability by adding mountain-bike bar ends.

Niche Hybrids

Within these two major groups, there are many permutations and adaptations. Some come from the manufacturer, some are pieced together by the user. These include:

* The Commuter Bike. This can be a comfort bike or a fitness hybrid, adapted for commuting with the addition of fenders, racks, lights, and so on. Some commuters use disk brakes, which improve performance in the rainy conditions that are unavoidable when the bike is used as the primary vehicle. Most commuters opt for clipless pedals and compatible shoes to maximize pedaling efficiency.

* The City Bike. It can look like a commuter bike with muscles, meaning a beefier frame and wheels designed to take multiple hits from curbs, recessed manhole covers, and pot holes. City bikes often have a nondescript paint job so as not to attract the attention of thieves. The top tube may be wrapped in electrical tape (after-market) to protect it when locked to parking meters or street signs. It may have fenders, racks, and flat pedals.

* One-Bys and Single Speeds. Commuters who don't have to face hills will sometimes ride a one-by-, which means there is only one chain ring, making the bike a one-by-eight or a one-by-nine, and so on. Reducing the front drive components makes shifting simpler and maintenance less complicated. Single Speeds are just that - the bike has one gear; this is usually the province of more experienced cyclists. Most major manufacturers offer a single speed model or two, though in many urban bike cultures it's hipper to build one's own.

* Euro-bikes. This is the Amsterdam-type commuter or city bike, an upright style with fenders, skirts, lacquer paint job, and so on. While these bikes can be very chic looking and are fine for noodling down to the market, their upright, rear-weighted riding position generally makes them less than ideal for serious daily duty.