Sunnah in the Arabic language (without any religious context) means a way or method which can have two states, either a good Sunnah or a bad Sunnah.
As Rasoolullaah (sallallaahu 'alayhi wa sallam) said in a hadith:
"Whosoever does a good Sunnah he will get the reward for it and the reward from other people doing the same thing until the day of judgment. And whosoever does a bad Sunnah he will have the punishment from doing it and the punishment of others who practice it." [Muslim]
The definition of Sunnah differs, however, depending on the area of Sharee'ah. For example, a scholar in the area of Usool (fundamental principles) will define Sunnah as whatever was reported that Rasoolullaah (sallallaahu 'alayhi wa sallam) said, did, or permitted to do. As an example of what he said, are the hadeeths which deal with the different Ahkaam (regulations) in different contexts, such as his (sallallaahu 'alayhi wa sallam) saying:
"The reward of deeds depends on intentions..." [Bukhari & Muslim]
An example of what he did is that which his Companions have reported of him (sallallaahu 'alayhi wa sallam) doing in the matters of 'Ibaadaat (acts of worship), such as: The way to perform Salaat (prayer), Hajj (pilgrimage) and Adab us-Siyaam (etiquette of fasting). An example of what he (sallallaahu 'alayhi wa sallam) permitted to do is whenever he kept silent upon seeing the Companions doing things; his (sallallaahu 'alayhi wa sallam) silence served as approval; or his acknowledgment to the Companions that they did the right thing. An example of his permission is when the Companions made Ijtihaad (decision by reasoning) during the battle of Bani Quraydha. He (sallallaahu 'alayhi wa sallam) said: "Do not pray 'Asr till you are at Bani Quraydha." [Bukhari & Muslim]
Some of the Companions understood that to mean that they should delay prayer till they reach the place. However, some Companions understood that to mean that they have to hurry, and so they did pray 'Asr on time. In neither case did the Prophet (sallallaahu 'alayhi wa sallam) say anyone of them was wrong and he did not reject what they did. Another example where Rasoolullaah (sallallaahu 'alayhi wa sallam) said something when he saw an action by a Companion is when Khalid ibn al-Waleed ate a lizard that Rasoolullaah (sallallaahu 'alayhi wa sallam) refused to eat. Some of the Companions wondered, and asked him "Is it haraam (unlawful) to eat it, O Messenger of Allah?" The Prophet replied:
"No, but it is not common in my area, and I don't feel to eat it." [Bukhari & Muslim]
Another familiar meaning of Sunnah is that of legal daleel (evidence, proof) whether it is in the Qur’aan, the Prophet's sayings, or Ijtihaad by the Companions, such as the collection of Qur’aan in one book and unifying the reading of the Qur’aan on one Harf (reading style). Opposite to this is Bid'ah (innovation); Rasoolullaah (sallallaahu 'alayhi wa sallam) said clearly: "Follow my Sunnah and the Sunnah of the righteous Caliphs after me" and did not say follow my bid'ah which should not be taken to mean the same as Sunnah. This can be shown by the definition used in Fiqh where we say this is the "Sunnah" divorce and that is the "Bid'ah" divorce.
These differences in looking at Sunnah is dependent on the faculty of scholars, just like any area of science where definitions vary.
In general we can define the Sunnah as whatever Rasoolullaah (sallallaahu 'alayhi wa sallam) said or did to be way of life for us.