Satire is, indeed, a literary device that is used to ridicule a person, idea or society, in some way. There are several types of satire. Dr. L. Kip Wheeler offers this definition:
Satire: An attack on or criticism of any stupidity or vice in the form of scathing humor, or a critique of what the author sees as dangerous religious, political, moral, or social standards.
A parody is a mellow form of satire, and is usually humorous. Videos that make fun of famous songs are parodies. A TV show that adopts a flashback method so its characters can imitate a famous TV show or movie is a parody.
However, a satire is generally harsh in nature. It holds up to the world the foolishness of a person, government or even religion.
For example, Gulliver's Travels, by Jonathan Swift is a political satire direction at the society—especially England's: of which he was a part. In his writing, "A Modest Proposal," he (satirically) suggested that to improve the plight of the starving poor in Ireland, the Irish should fatten up their babies and sell them for food. (He was not serious, but trying to—harshly—make a point that these people needed help.)
Other famous satirists are Geoffrey Chaucer (who wrote The Canterbury Tales, criticizing servants of the clergy who took advantage of the wealthy, and especially the poor); France's Moliere (who in his comedy Tartuffe made fun of people who pretended to be religious and above reproach, but were actually hypocrites of the highest degree); and even Mark Twain (who made fun of several kinds of people in The Adventures of Huckleberry Finn who took advantage of others, or tried to present themselves as decent people when they were anything but that.
In fact [Huck's] conscience, warped by the distorted moral world he has grown up in, often bothers him most when he is at his best. Ironically, he is prepared to do good, believing it to be wrong.)
There are many other examples of satirists who have used writing to draw attention to situations or people that he/she believes need to brought to light to convey foolishness, hypocrisy, etc. eNotes reminds the reader that satire is "alive and well" in circles other than literature.
Satire is nowadays found in many artistic forms of expression, including literature, plays, commentary, and media such as lyrics.