usability is a term used to denote the ease with which people can employ a particular tool or other human-made object in order to achieve a particular goal [Wikipedia].
"Don't make me think".
this is not only the title of an excellent book on web design and usability, but an excellent mantra to chant when designing a site.
a visitor should never have to figure out your web site: searching for your contact link, hunting for relevant information, waiting while large, pointless images load and having a Flash website reset every time they hit the back button are all indications of a bad experience.
the rules are simple, but also hard to enforce. Too much information is just as bad as too little. Graphics and images are nice, but they can get in the way, distracting from content and slowing down your site.
usability is about balancing everything in consideration of your audience and your message, making information 'findable' and managed. It doesn't mean drab and stark, or aesthetics vs. content. Again, balance.
little things, like breadcrumbs (you are here: home > definitions > usability), white space, menu placement and other features can all aid in web site usability.
in the end, usability is all about giving your visitors the tools to find what they are looking for, leading them when it's necessary and getting out of their way when it isn't.