Diffraction can refer to many different phenomena, including spreading, bending and interference of waves after they have passed an object or a gap in an object which disrupts the wave.
Different amounts of diffraction take place, depending on what size the hole is, compared to the wavelength. Usually, the smaller the gap, the better the diffraction. When the wavelength is equal to the size of the wavelength, perfect diffraction takes place.
An everyday example of diffraction involving light is the backs of DVDs or CDs. They are made up of tiny tracks, which act as a diffraction grating. This makes it form the colourful rainbow pattern we see.