A party game is a game that is best played with other people. These games always include multiplayer and are a compilation of minigames. Based on the idea that everyone should be able to play, the games are very simple and only last a couple of minutes. They're usually family friendly games.
Party games usually take place on a board. Each person rolls and ends up playing a minigame against the other players. Whoever wins gets points and the winner is the one who scores the most points. There are simplified versions of this where each player takes a turn to pick a minigame without the whole board concept. Not all party games are minigame collections. Some are quiz games (Buzz ! Quiz World), others are music games (Guitar Hero) and some are even video game adaptations of popular board games (Monopoly).
The Wii has become notorious for all its party games. Thanks to its simple controls and fun concept (waggle), the Wii has become the go-to place for party games.