Anything in a garden, that has water involved in it somewhere, and is a feature of the garden.
Water features have been popularized recently by television programmes such as Ground Force (they're Charlie Dimmock's speciality). They can range from huge towering fountains to little streams, from waterfalls to basins. They're supposed to be calming and relaxing areas - you go and chill out by them.
Where calling them 'water features' came from, though, I have no idea; it's a miserable term too. It's like calling a television 'an audio/visual entertainment device' or a rubbish bin 'a refuse disposal facillitator' (I'm not aware that these things are known only by these terms yet - but it'll happen). Miserably, there seems to be something rather pompous about naming something after its attractiveness: 'Do you like our water feature?' Gardens have suddenly become show-pieces to wow the neighbours with.
Imagine someone trying to buy the hotel overlooking Niagara. The estate-agent, complete with false smile and catalogue hair smarms, 'And through this window you can see our breath-taking water feature'. Please.
If it's a waterfall, call it a waterfall. If it's a fountain, call it a fountain. And if it's a pitiful trickle of sludge running through a badly moulded piece of plastic with a 'mock boulder' effect - very few suburban gardens seem to be complete without them - then calling it a 'water feature' is seriously not going to take anyone's attention away from its ingloriousness.
If you want a fountain in your garden, go and buy one.