I found this definition of Feng Shui from Wikipedia:

Feng Shui is a Chinese belief system involving a mix of geographical, religious, philosophical, mathematical, aesthetic, and astrological ideas. It literally means “wind (feng) and water (shui)”, and is not simply a decorating style, but a discipline with guidelines compatible with many different decorating styles.

Feng Shui (pronounced “fung shway”) is the ancient Chinese practice of placement and arrangement of space to achieve harmony with the environment. The literal translation is “wind and water”.

The source of the term is purported to come from the Burial Book written by Guo Pu in the Jin Dynasty. Qi (or Chi) rides the wind and stops when it meets the boundary of water. The ancients could manipulate Qi so that it did not dissipate, and directed it so that it was retained. For this reason this art is called Feng Shui.

For a place to have “good Feng Shui” is for it to be in harmony with nature, and to have “bad Feng Shui” is to be incongruous with nature. Although people aren’t usually described as having good or bad Feng Shui themselves, believers in feng shui say that certain people by force of personality or visual appearance are able to add or subtract from the Feng Shui of their surroundings.

There is quite a bit more information, and if you are interested here is the link: Feng Shui. I found another definition at About.com:

“Feng Shui teaches us how to create harmony and balance around us,” says Stanley Bartlett, who uses the centuries-old art to design homes and businesses. “Everything is related to everything. If we pay attention to our environment, then we will find ways of creating different realities in our lives. When we move the bed, we also change our relationship with things around us in ways there aren’t words for.”

Feng Shui is the ancient art of placement. Your personal belongings in the home are positioned in a specific arrangement to enhance chi to bring harmony and balance to your life. Chi is an invisible energy that swirls around us at all times. Feng Shui translated literally means wind and water because the chi travels on the air and water currents.

The main purpose of utilizing the Feng Shui principles is to bring harmony and balance into your home.