An instrument which presents its user with an accurate indication of the orientation of an imaginary ground plane.
There are two main kinds of artificial horizons used. Airplanes have an artificial horizon mounted in the dashboard which is oriented using a gyroscope. Traditionally, this is the blue and orange ball one sees in cockpits that indicates "Hey, pilot, you're upside down."
The other type consists of a pool of reflective liquid (often mercury) and is used by surveyors and (less often these days) navigators. A celestial object (e.g. the sun) is sighted using a surveyor's sextant and the reflection of the object in the artificial horizon is brought into unison with the sighting of the object itself. By dividing the two readings, a reasonably accurate measurement can be taken of where the horizon lies. This assumes, of course, that the pool of mercury is kept relatively stable while the measurements are taken.