This sociological term
encompasses all of the untrackable income
that circulates underneath the established framework
of the formal economy
or the legit money
or whatever you want to call it. The basic
idea is that an informal
economy exists without the usual support network
of government regulation
(if there is actually money
involved), or record keeping
While the easy assumption would be that the black market, drug dealers, tax evasion account for the majority of this uncounted (at least where the Gross National Product is concerned) currency, it is pretty diverse and widespread.
Unpaid domestic labor is probably the largest percentage of the informal economy. This should be pretty obvious is you grew up in a traditional family setting where the mother stayed at home and took care of the household management stuff.
Also included in this sphere of the economy is barter. Work exchanged for goods is impossible to track and the emergence of resources like PayPal that exchange currency from within a closed system create small informal economies of their own.
Volunteers are another source of unrecorded labor. Though volunteers aren't paid there are a few institutions that depend on free labor. Hospitals are a good example. If you've ever been hospitalized for any length of time you start to realize that the old ladies (candystripers) who volunteer do an amazing amount of work there.