The term "steampunk" originated in the late 1980s, coined to describe the works of science fiction authors K. W. Jeter (Morlock Night, 1979, and Infernal Devices, 1987), Tim Powers (The Anubis Gates, 1983) and James Blaylock (Homunculus, 1986)
Steampunk fiction features steam-powered machinery and is set during the 19th century, typically in Victorian Britain, though stories can also be set in the American "Wild West", in a post-apocalyptic future during which steam power has regained mainstream use, or in a fantasy world that similarly employs steam power.
Some, like Gibson and Sterling's The Difference Engine, take a serious look at either an alternate Victorian period or post-apocalyptic Earth, while others prefer to take a romp through the era. These books, such as Ballantine and Morris's Phoenix Rising and Saintcrow's The Iron Wyrm Affair are my preference, and also the kind of thing I love to write.
Further reading: Ranting Dragon's 20 Must-Read Steampunk Books