Now this is a topic that works me up everytime I talk about it. I'll try to keep it simple this time, as it's something I'll be coming back to often, I imagine.
RPG is an abbreviation which stands for Role-Playing Game. You can define this in three ways - the relaxed definition, the strict definition, or the 'something-in-between' definition.
In all the definitions, a role-playing game is a game in which you play a role. The difference is in the meaning of the word "play".
In the relaxed sense, "playing" is just having a character you play with. This makes almost every video game ever made a RPG, and since the definition is so broad that it becomes virtually useless, let's leave this behind.
In the strict sense, "playing" assumes a large degree of freedom, one that cannot be really achieved in video games because of the barriers the medium involves. In this definition, only the "classic" pencil & paper RPG's (and not even all of them) meet this criterium. Just for the record - this is the definition I use, but since we're talking about RPG video games, there has to be a middle way.
This middle way is, in my opinion, covered by three different terms: Hack & Slash games, Action-RPG's and cRPG's.
The first doesn't have much to do with RPG's, but it does borrow some mechanics from this type of games. You have some limited dialogue (usually monologues from non-player characters), a character advancement system (you level up or upgrade your abilities) and you can choose what kind of weaponry and armor your character uses. But that's all the options for players if they want to influence the game in any way outside killing stuff. You have no way to influence the plot, very little freedom and the game is really only about killing things, so you can take their stuff, so you can kill more powerful things and take THEIR stuff. Is that an RPG? Nope, it only shares some ideas with the genre, which is why the term "Hack & Slash" has been coined. And don't get me wrong - I love myself a good H&S. But I hate when people try to call it an RPG.
Games that belong to this sub-genre of the "in-betweens" are Diablo 2, Loki or Titan Quest.
The second term, Action-RPG, has been somewhat more popular about 10 years ago. I rarely see it around anymore. The full definition of a game like that would be "A game with RPG elements which focuses mostly on action (fighting and/or dexterity tests), but allows for some freedom of choice." You'll have dialogues which outcomes you can influence, probably some skill-points/experience points kind of levelling-up system, and a bit of meaningful choices to make along the way. The plot is still mostly rigid and you can't really change much.
The games that fall under this sub-genre are Gothic, Deus Ex or (I think) Anachronox.
And lastly, a cRPG would be a game which is closest to a "real" RPG. It not only has RPG elements like the ones mentioned above, but also includes many chances for actually choosing what your character is like (usually quite limited, by congrats for trying) and the choices you make sometimes do influence the plot. Of course there is no absolute freedom, because the game has it's plot and you will reach certain points at some time or another.
The games here are: Knights of the Old Republic, Planescape: Torment and Fallout.
Why do I bring this up at all? I'm a fan of flash games, but I get really irritating when they give me a hack&slash, but advertise it as an "epic RPG". No people, get your facts right. It's high time some system of classification emerged here. If a game has character advancement, it doesn't make it and RPG. It just makes it a game with character advancement.
With that, I leave you. Any comments? You know what to do.