Don Norman describes it best:
I invented the term because I thought human interface and usability were extremely good. I wanted to cover all aspects of the person's experience with the system including industrial design graphics, the interface, the physical interaction and the manual. Since then the term has spread widely, so much so that it is starting to gain its meaning.
Today, User Experience Design typically encompasses:
User experience is the complete package. From the moment a customer receives their new iPhone in its sleek interior packaging to the smell of the box, the charge level of the phone out of the box, the feel of the device in the hand, the consistent performance of the capacitive touch display, the wide variety of available apps, the battery life of the device, its resistance to water and breakage, the quality of the wifi connection. These are all encompassed by the user's experience of the product. User Experience Design is the domain responsible for ensuring quality and consistency across the entire surface area of the product experience.