From Bulbapedia, the community-driven Pokémon encyclopedia.
Pokémon (Japanese: ポケットモンスター Pocket Monsters; ポケモン Pokémon for short) are 721 known species of creatures that inhabit the Pokémon world, however, it is implied that there are more waiting to be discovered. Inherent to them are several fantastic powers not demonstrated by most real animals, such as the manipulation of electricity or fire. Pokémon are shown to exist instead of animals in their world, although animals are also seldom seen in older media. While most Pokémon resemble animals and may behave like them, there are many that do not resemble animals at all; taking on other forms such as plants, inanimate objects, machines, human-like forms or other more enigmatic and exotic appearances. Pokémon inhabit an extremely diverse range of habitats, ranging from the driest deserts to the lushest jungles, the deepest oceans to the highest mountains and everything else in-between, even outer space and other dimensions. Pokémon take up various ways of living in those places. However, all can be befriended and made into potential allies.
Many Pokémon are known to evolve from or into other Pokémon, a process that typically makes them larger and stronger, and could be seen as the equivalent to growth and development or metamorphosis. Pokémon typically know several techniques that they can use in battle or elsewhere, either to defend themselves or their Trainer, or to perform a task. In the anime, most Pokémon are known only to say their name. In the games, each Pokémon has a distinct voice associated with each species.
In the games
Pokémon have been, from the very beginning, spoken of as friends and partners to the humans of the Pokémon world, used to help with various tasks from constructing buildings to exploration. Many people in the Pokémon world take Pokémon with them on a journey to gather Badges and compete in the various Pokémon Leagues as Trainers, using them in battles against Pokémon both owned by other Trainers and found in the wild. In Generation III, the concept of Pokémon Contests were introduced in which Trainers can compete with their Pokémon as an alternative to battling. This was replaced in Generation V by the Pokémon Musical.
Across the six generations of games, Pokémon are typically found in one of four manners: encountering them in tall grass, finding them in caves or ruins, going fishing for them, or trading with an NPC. These are often joined by several more ways in which to encounter Pokémon, such as surfing on water, headbutting trees, or using the Poké Radar.
In the games, Pokémon are no more than fragments of data, identifying certain characteristics inherent to them. As the games have progressed, more data is added to each Pokémon, typically to reference new features introduced in games of the new generation.
The methodology for construction of Pokémon data changes across generations. For the different constructions, see Pokémon data structure in Generation I, Pokémon data structure in Generation II, Pokémon data structure in Generation III, Pokémon data structure in Generation IV, Pokémon data structure in Generation V, and Pokémon data structure in Generation VI.
In the anime
In the anime, Pokémon are shown to be creatures with distinctively more anthropomorphic qualities than normal animals, with several even able to speak. Some Pokémon have the ability to speak the dubbing language instead of their own names, such as Meowth of Team Rocket. They also seem to be able to mostly understand human language, while most humans can't understand Pokémon speak, although there are a few who claim they can. Most species speak only one word: their own name, e.g. Pikachu saying "Pika! Pikachu!" and so forth.
The anime takes a clear stance of right and wrong on the use of Pokémon: Trainers such as Ash are shown to treat their Pokémon with respect, as partners and friends, while evil organizations like Team Rocket are shown to use Pokémon as mere tools, keeping them in cages, making them fight to exhaustion—a stark contrast to Ash and his Pikachu, who he treats as his best friend and keeps on his shoulder, rather than in a Poké Ball, because of its own preference.
The anime has given a more in-depth history of human interaction with Pokémon than is given by the games: In The Birth of Mewtwo radio drama, it is implied that Pokémon came into the world after the human species did. Poké Balls have not existed forever, and are in reality an apparently recent development, with one owned by a young Professor Oak being shown to be vastly different than ones used in modern times.
Prior to the invention and mass-production of Poké Balls, people tended to use hollowed-out Apricorns, native to the Johto region, to capture Pokémon, while even further back, Pokémon were not known as "Pokémon" at all, but as "magical creatures" (Japanese: 魔獣 majuu). In these times, many Pokémon were apparently feared because of their powers, sometimes so great that the most powerful of these monsters passed into legend and were often seen as deities in their own right.
Interestingly, Ash and his friends, through their interaction with history in Arceus and the Jewel of Life, seemingly invented the term "Pokémon" to refer to these creatures. This, however, creates an bootstrap paradox, as their knowledge and use of the word comes only from its wide use in their future time. What may remain true is that the term came into practice elsewhere on its own.