In general I think you can describe it as a punishment focused on restricting freedom as a consequence for bad behavior. Sort of like a house arrest only the government isn't usually involved. The details seem to be a little more varying and specific within a family unit.
My friend, Teri, she gets grounded as a consequence for most things she does wrong. The duration is anything from two days to a month. Essentially, for that period of time, she can't use her phone and can't leave her bedroom for anything other than bathroom, meals, and school. Although restrictive in physical location, it's certainly not as bad as it could be. She does still have a computer, tv, ipod, books, and pretty much anything else you might want to do to entertain yourself while stuck in your bedroom. Needless to say, I don't have much sympathy for Teri when she's grounded cause life still isn't all that bad for her.
Another friend, Lisa, winds up grounded much less often because her father favors long lectures for most things. When she does push the limits a bit too far, she gets grounded for either 1 week or 2 weeks depending on how mad she made her father. In her case, being grounded consists of having her phone, tv, and computer taken away, confined to the house with the exception of school, and having to do extra chores. The chores consist of annoying work like: polishing shoes, mirrors, or faucets; scrubbing floors, bathroom tile grout, or kitchen appliances; cleaning windows, walls, doors, or cars; and a few other laborious jobs only her father can imagine. I think that's a bit worse than Teri's situation but still not really that awful, it's only a week or two.
Then there's Amber, her parents are pretty strict. She wasn't even allowed to date until she was 16 and could not drive until she was 18. When she gets grounded, which isn't often because she actually doesn't get into much trouble if you can imagine, it's always exactly 30 days. Her parents take her bedroom door away and her room is stripped of everything non-essential. I mean they even take her lipstick away, now that's cruel. She can't go anywhere except school and her mother takes her and picks her up. Her parents keep her on a strict schedule controlling her every waking moment and she isn't allowed to talk unless she is answering a question asked of her. I personally think of all the people I know, she has it the worst. I feel bad for her when she gets grounded because I think I would go mad if I had to follow those kinds of rules for a whole month, but she manages it and never complains at all.
And last, but definitely not least, is me. That's right me. I get grounded from time to time as well when my parents feel my behavior warrants something a little longer lasting than a single spanking. For me it can vary a bit as to exactly what "privileges" are taken away, which means I never know until it happens whether I'll be able to watch TV, use the internet, leave my bedroom, etcetera. The constants are: It's never less than a week, it's always accompanied by daily bare bottomed spankings in front of the family, It always has daily corner time usually before and after the spanking but sometimes just after, and I'm always given extra chores to do on a daily basis.
I think there are probably a lot more variables than those above on grounding and I've heard of somethings which make some of this sound like out right torture and other making it sound like a walk in the park. Personally, I'd rather just take the spanking or a series of them and forget the rest, but as I've heard many times, punishment is not about what I like or prefer.