In its simplest form, crowdsourcing is simply generating ideas or work through the power of a crowd – usually enabled by the Internet. Wikipedia, for example, is one of the largest crowdsourced works in the English language, comprised of over 4.5 million articles submitted from all over the world.
The latest evolution of crowdsourcing is crowdfunding; collecting (often small) donations from a massive number of people. Charities, naturally, have benefitted from this type of funding scheme. However, quite a few for-profit projects have gotten off the ground this way too.