Machinima (pronounced /məˈʃiːnɨmə/ or /məˈʃɪnɨmə/) is the use of real-time three-dimensional (3-D) graphics rendering engines to generate computer animation. The term also refers to works that incorporate this animation technique.—From Wikipedia
My own definition of machinima is: animations made from an already exist 3D environment, which can be PC games, video games, or an environment like Second Life. The machinima makers does not need to create their own 3D world, but may need to modify the characters/avatars and environment for their story.
There are thousands machinima on the internet, some of them are like movies, music videos, and some of them are like tutorials or documentaries.
This machinima example I put here is named “Better life.” I saw this machinima about 3 years ago, and deeply touched by the combination of the song and the story. (Second Life, was just another place to have my life for me at that time; I didn’t think SL can really be a better place for some people to have their life before I saw this video.) This machinima is little bit long, but really nice, wish you enjoy it~ :)