Terroir is originally a French term used to denote (designate and indicate) the special characteristics that a unique geography has bestowed upon wine. It can be very loosely translated as 'an essence or sense of place' which is embodied in certain qualities, and the sum of these effects that the local environment has on the wine.
The concept of terroir is at the base of the French wine AOC system that has been a model for appellations, wine laws across the globe. At its core is the assumption that the land from which the grapes are grown impart a unique quality and character that is unique and specific to that region and place / site. The amount of influence that falls under the description of 'terroir' has been the source of many long conversations.

 

The concept of 'terroir' developed through centuries of French winemaking based on observation of what made wines from different regions, vineyards or even different sections of the same vineyard so different from each other.
The French began to crystallize the concept of 'terroir' as a way of describing the unique aspects of a place that influences the wine made from there. While wine experts differ to the exact definition, a large focus is given to the natural elements that are generally considered beyond the control of man.
Some of the components described of 'terroir' include: Climate, Soil type & Topography.
The interaction of climate and 'terroir' is generally broken down from the macro-climate of a larger area (e.g. the Côte de Nuits region of Burgundy), down to the meso-climate of a smaller subsection of that region (e.g. the village of Vosne-Romanee) and even to the individual micro-climate of a particular vineyard or row of vines (like the Grand Cru vineyard of Romanee-Conti). The element of soil relates both to the composition and the intrinsic nature of the vineyard soils, such as fertility, drainage and ability to retain/disperse heat.
Topography refers to the natural landscape features like mountains, valleys and bodies of water, which affect how the climate interacts with the region, and includes elements of aspect and altitude of the vineyard location.