An economic bubble is sometimes referred to as a speculative bubble, a market bubble, a price bubble, a financial bubble, or a speculative mania. Technically it is "trade in high volumes at prices that are considerably at variance with intrinsic values". Or another way to describe it is: trade in products or assets with inflated values. The crash following the economic bubble of the 1920's was one of the main causes of the Great Depression.
To give a real and current example we'll use the housing market. The primary purpose of a house is to live in it, and the intrinsic value of a house is based on its livability. Everyone has a determined amount of money and resources they are willing to commit to providing themselves a place to live. This amount is generally consistent over long periods of time (adjusting for true inflation) but can be heavily volatile over short periods of time.
Short term volatility is generally created when a mix of market elements come together. Home ownership incentives by the government, in the form of various regulations to banks, along with the creation and subsidization of institutions like Freddie Mac and Fannie Mae, ignited by very easy credit from the Federal Reserve and the Banks, creates the short term volatility cocktail. Without this market interference and the availability of expansive amounts of low interest credit, we would reduce if not totally eliminate these large price swings. Bubbles are merely the peak of the volatility in the short term and the return to intrinsic value.