Any evidence that is offered by a witness of which they do not have direct knowledge but, rather, their testimony is based on what others have said to them.
The evidence may be admissible to show that another person's statement was made, but not of the truth of what was contained therein.
From The Law of Evidence in Canada (2nd ed., 1999, p. 173) by the late John Sopinka:
"Written or oral statements or communicative conduct made by persons otherwise than in testimony at the proceedings in which it is offered, are inadmissible if such statements or conduct are tendered either as proof of their truth or as proof of assertions implicit therein."
For example, if Bob heard from Susan about an accident that Susan witnessed but that Bob had not, and Bob attempted to repeat in Court Susan's story as evidence of the accident, it could be objected to as "hearsay."
The basic rule, when testifying in court, is that you can only provide information of which you have direct knowledge.
Hearsay evidence is also referred to as "second-hand evidence" or as "rumor."
You are able to tell a court what you heard, to repeat the rumor, and testify that, in fact, the story you heard was told to you, but under the hearsay rule, your testimony would not be evidence of the actual facts of the story but only that you heard those words spoken.
In R. v Abbey 1982 2 SCR 24 (available online at canlii.org/en/ca/scc/doc/1982/1982canlii25/1982canlii25.html), the Supreme Court justified the rule against hearsay as follows:
"The main concern of the hearsay rule is the veracity of the statements made. The principal justification for the exclusion of hearsay evidence is the abhorrence of the common law to proof which is unsworn and has not been subjected to the trial by fire of cross-examination. Testimony under oath, and cross-examination, have been considered to be the best assurances of the truth of the statements of facts presented."