Digital storytelling is the use of digital tools to allow ordinary people tell their own real-life stories.
"Digital storytelling" is a new term, arising from a grassroots movement that uses new digital tools to help ordinary people tell their own 'true stories' in a compelling and emotionally engaging form. These stories are usually short (less than 8 minutes) and can be interactive.

The term "digital storytelling" can also cover a variety of new forms of digital narratives (web-based stories, interactive stories, hypertexts, and narrative computer games). It is also sometimes used to refer to any type of film-making, and is now often used for advertising and promotional work for both commercial and non-profit enterprises.

One can define digital storytelling as the process by which people of all ages and experience share with others stories from their lives or creative imagination. This new form of storytelling has emerged with the arrival of accessible media production techniques using computers, digital cameras, voice recorders, and software. These new technologies allow individuals to share their stories over the Internet, on discs, podcasts, or other electronic distribution systems. One can think of digital storytelling as the modern extension of the ancient art of storytelling but now woven together with images and sound. With digital technologies individuals can now also approach storytelling from different perspectives, and and many are using and elaborating non-traditional story forms, such as non-linear and interactive narratives.

Simply put, digital stories are short movies (typically 2-3 minutes in length) that combine multimedia elements such as photographs, video, animation, sound, music, text, and voice with a narrative of some kind. As an expressive medium in the classroom, digital stories can be used to integrate subject matter knowledge and skills from many areas of the curriculum. Students can work individually or collaboratively to produce their own digital stories. Once completed, these stories can easily be uploaded to the Web and viewed by a worldwide audience.

(Source: http://en.wikipedia.org/wiki/Digital_storytelling)