A Satoshi is the smallest fraction of a Bitcoin that can currently be sent: 0.00000001 BTC.
That is, a hundredth of a millionth BTC.
In the future, however, the protocol may be updated to allow further subdivisions, should they be needed.
Further examples of units
1 BTC = 1,000 mBTC (millibitcoin)
1 BTC = 1,000,000 μBTC (microbitcoin)
1 BTC = 100,000,000 Satoshis
1 mBTC = 100,000 Satoshis
1 μBTC (microbitcoin) = 100 Satoshis
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