Two recent Quora questions focus on trying to define some of the standard jargon that gets tossed around in our industry -- namely the "Internet of Things" (or "IoT", and frankly, I'm not sure which is more awful sounding), and machine-to-machine systems, or M2M (which to my ear is more palatable).
To the researcher who asked, "What is the definition of Internet of Things?, I reply:
Today's Internet is built around transactions between parties. In most cases, they typically involve a person (e.g. the one sitting in front of a web browser), and either:
a) another person (perhaps directly, via IM, or through a proxy like Facebook), or
b) a service (streaming audio from Pandora, video from Netflix, or text and images from CNN or Google).
The Internet of Things is still all about transactions, but in this case one of the parties is a "Thing," and people aren't necessarily part of the transaction at all. In other words, on the IoT, transactions might be between:
a Thing, and
a) a person -- either directly via a mobile app or even an audible/visual notification system like an alarm buzzer or digital sign, or indirectly through a proxy like a cloud management platform, or,
b) another Thing (these transactions are also called M2M systems because two or more machines are talking to each other without human intervention)
Obviously even in the M2M case the system's output is eventually going to some human viewer, but in many cases the mundanities of the transaction are completely hidden, and are only of importance to the two Things involved.
I applied a similar (but much less verbose) answer to a similar question: Whats the difference between the "Internet of Things" (IoT) and "Machine to Machine" (M2M)?
In a nutshell, on the IoT (bleh) communications and transactions are between a "Thing" and one other actor. When that other actor is also a "Thing", it's called M2M, as both parties are machines.