Insider information is knowledge that is not available to the public concerning a company's activities. For the purposes of the Securities and Exchange Commission, the information has to be about something 'material', meaning that it could affect the stock price when it becomes publicly known. Trading based on insider information is illegal.
Material information available only to a company's insiders could include a pending buyout offer, the fantastic results of an oil survey, or the disastrous performance of one segment of the business. The news will eventually be released to the public, but for a while, insiders such as the chief executive officer, chief financial officer, and board members are in on a secret. Insiders privy to this kind of important information have a fiduciary duty to keep silent in order to protect the business and its shareholders.
Insider information is part of business. A company might flounder if the bosses aren't the first to know what's going on. Business savvy also goes into the timing of announcements.
The matter gains the most attention when someone is accused of insider trading, which is using the private information to buy or sell stocks in advance of the news coming out. In that case, the insider would be using his information to gain an unfair edge in the market. The range of who can be convicted of insider trading stretches beyond the boardroom, and the definition of what qualifies as material insider information is broad.