These days you are most likely to hear pastel used to describe a color, rather than a medium. Just as pastel paints are lighter than oil-based paints, pastel colors are lighter colors. In the language of color theory pastels would be called tints, a mixture of a given color with white. In everyday language, a pastel is simply any color that is noticeably pale, but still easily identifiable as that color. Colors that are significantly washed out might be referred to as creams rather than pastels.
Pastel is still a somewhat informal term, and these colors are best defined in a "I know it when I see it" spirit. Pastel colors include traditional pink (but not hot pink!), lavender, baby blue, peach, and primrose yellow, although most of these also come in darker or brighter shades. If you wish to describe a pastel, it is usually best to use a modifier such as 'pale' or 'pastel' to avoid confusion. Pastels are currently strongly associated in Western culture with Easter and babies.