PokéBase - Pokémon Q&A
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>This is the world of competitive Pokemon, the art of playing Pokemon to win. In this world, that 999 attack Pelipper you hacked as a joke to sweep your friend's team isn't allowed. Competitive Pokemon emphasizes an understanding of game mechanics, team organization, and battle tactics, rather than cramming four moves of differing types on your Pokemon and picking whichever one is super effective.

Competitive battling is battling other people, not just in-game NPCs. It involves determining movesets which are much more tailored and specifically geared towards a Pokemon, taking into account abilities, types and stats. You also have to consider your whole team's "synergy", i.e., how 6 Pokemon work together in order to cover each others weaknesses and liabilities.

Competitive battling also sees you spending much more time breeding a Pokemon with a good nature for what role you want it to play on your team, e.g. Adamant nature for a physical attack based Pokemon, and to get better IVs (Individual Values) so it performs better in battle.

Competitive battling is a lot harder and has a lot more intricacies than battling a NPC character, because you're now not up against artificial intelligence any more, and your opponent is much more capable in reacting to your decisions, and will counter your battles much more coherently than a NPC will.

Smogon's Gen IV Introduction to Competitive Pokemon
2 Generations out, but still a worthwhile read.

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Competitive teams are teams made up of pokémon specifically EV-trained to enhance the strengths of their base stats in order to maximize their potential for online battles.

If you don't know what EV-training is, please read the following:

It's not just EV training, it's SO much more than that.
When most people say "EV-training", they mean to include the whole Nature/IV's/Movesets deal. This guy seems to be new to the whole concept, and EV-training itself is the hardest part of the whole thing, so it's best to let him learn about that first.
EV training doesn't refer to all that. It solely refers to EVs. And still, this answer is incomplete.
That doesn't make it an incorrect answer. If you feel there's something to add, put it in a second answer yourself, but don't act all high and mighty by running me down when i'm actually the only one here being helpful.