Lagging is were a computer can't read the coordinates and skips them causing it to slowing down,skip,freeze,lose connection and even crash the game.

Games that have high graphics ( Half-Life,Halo,L4D,COD,WOW etc) have a higher chance of lagging.

{from Wikipedia)
Many online video games such as World of Warcraft and Quake III Arena function best when the game players have minimal latency from their client machine and the host server. The latency between a client game and the host server is referred to as the client's ping. Disruption (lag) of a client connection has a negative impact on that client's gaming experience. Internet lag is undesirable because it disrupts normal game-play. Due to this, many players that have a high latency internet connection are often not permitted, or discouraged from playing with other players or servers that have a distant server host or have high latency to one another.

Lagging also depends on the computer to.

Lagging also bothers people in many ways such as lagging when play co-op and using the mic.

Also lagging rarely happens on the console but it can happen.

Emulators lag a lot like the ones used for GC and Xbox and sometimes project64.