Definition
SegWit (BIP 141) was activated on Bitcoin in August 2017. It moved witness (signature) data to a separate structure, allowing more transactions per block by introducing the concept of block weight (maximum 4 million weight units) instead of a simple 1 MB size limit.
SegWit also fixed the transaction malleability bug, enabling second-layer protocols like the Lightning Network. SegWit transactions use addresses starting with bc1 (bech32 format) and are more efficient, resulting in lower fees.
In Simple Terms
A 2017 upgrade that increased block capacity by separating signature data and enabled the Lightning Network.
Segregated Witness. A 2017 soft fork that separated signature data from transaction data, effectively increasing block capacity and fixing transaction malleability.