Imagery is language which appeals to the five senses. It doesn't have to appeal to all five at once, but it should be descriptive of a person, place, or object. For example, a paragraph about the colors of a sunset would be primarily visual imagery. A description of a summer day in the desert might focus on tactile imagery- the physical feeling of what's around you. By appealing to all five senses, an author makes his/her work come alive for the reader. It can also help connect an idea to everyday life, or allude to common human experiences.
Imagery is a kind of picture. The only difference between a real picture and an imagery is that, the real picture is a visual medium. On the other hand, imagery evokes a picture in our brain through the connotation of words used. For example, if we say "The grass is glittering in dawn", it creates an imagery of diamond studded grass, that is full of dews, in our mind. Imagery is very common in poetry, though its use is not only restricted to poetry alone. Other genre of literature, i.e. fiction, drama, prose works also use imagery to a great extent.