A wiki is a tool that allows multiple participants to create and edit a single document online.
A wiki is usually presented in a web page/document format and can include images, multimedia, links and attachments; multiple pages can also be created. Users access the wiki via the web and edit the content. These edits are usually tracked as 'history' so changes can be undone if required. Probably the most well known wiki is Wikipedia, anyone can create or edit entries to enhance knowledge sharing. myCourse has a built-in wiki tool you can use with your students for collaborative work.
A history of previous versions of each page in the wiki is kept, listing the edits made by each participant.
Quick note: Wiki comes from the Hawaiian phrase 'wiki wiki' meaning 'very fast'.
For more information, see docs.moodle.org - Wiki