A buff is a passive, sometimes temporary, enhancement of a character. Anything which increases elements such as attributes, increases in total health and mana pool or regeneration, or direct increases in combat ability through physical or magical attack power, is considered a buff.
Buffs are often categorized, based on how the buff is gained:
Items - some items will grant temporary buffs when consumed, sometimes in addition to debuffs.
Passive Skills - some passive skills will grant permanent buffs, so long as that passive skill has at least one rank. Increased ranks usually result in a more powerful buff.
Active Skills - some active skills will grant temporary buffs, to either just the caster or to all characters within a certain range.