A SoC is a complete system on a chip. By a system, we mean a something that generates activity, such as a processor, and most or all of its memory and peripherals. The processor may be a custom or standard microprocessor, or it could be a specialised media processor for sound, modem or video applications. Other generators of bus cycles are DMA controllers. DMA controllers can be arbitrarily complex, and are really only distinguished from microprocessors by their complete or partial lack of instruction fetching.
A SoC typically contains several such systems: that is, it is made up of a number of co-operating processor subsystems. These are interconnected using a variety of mechanisms, including shared memory and message-passing hardware entities such as mailboxes.
SoCs are found in every consumer product, from modems, telephones, DVD players, televisions and iPODs.