Interaction Design:

Definition one: Interaction Design(IxD) is the discipline of defining the behavior of products and systems that a user can interact with. The practice typically centers around complex technology systems such as software, mobile devices, and other electronic devices. However, it can also apply to other types of products and services, and even organizations themselves. Interaction design defines the behavior (the "interaction") of an artifact or system in response to its users.

<http://en.wikipedia.org/wiki/Interaction_design>

Definition two: Interaction Design is a field and approach to designing interactive experiences. These could be in any medium (such as live events or performances, products, services, etc.) and not only digital media. Interactive experiences, necessarily, require time as an organizing principle 9though not exclusively) and Interactive Design is concerned with a user, customer, audience, or participant's experience flow through time. Interactivity should not be confused with animation in which objects may move on a screen. Interactivity is concerned with being part of the action of a system or performance and not merely watching the action passively.

<http://www.nathan.com/ed/glossary/index.html>

For good examples of Interactive Design please visit:

<http://www.freedominteractivedesign.com/main.htm>
<http://www.fireflyinteractive.net/oldsite/index_flash.htm>