The definition of "Web Design" can vary, depending on who you ask.  The basic answer is that Web design is the creation of a Web page or Website, including the information and user interface design, but not including programming. A  professional-quality design that includes features such as page layouts, custom interactive navigation, unique font and color schemes, and the use of other dynamic features..

To clarify this a bit, let's outline the process of creating a Website from scratch.

Discovery. In this step, the Web designer finds out as much about the company and its clients as possible, paying special attention to the target audience.  What is the impression that the client wants to give to the users?  What is the "feel" of the website? Image?

Planning. What is the goal of the website? It is important that the scope, audience and goals of the Website are clearly defined during this stage, so the resulting project definition can be used as a touchstone to keep everyone on track throughout the process. 

Information Design. What content will be included in the website?  How will it be broken down and presented to the user?  What will be the flow and navigation for the site?  The information design step includes design of the navigation and is the most critical step in making the Website user-friendly.  This step also includes determining what pieces of information will be included on the home page.

Graphic Design. Graphic design may seem trivial to some, but it is also a very important factor in the usability of the Website. It isn't just about making the Website look pretty. It is also about visual balance and readable typography, both of which are critical in the creation of a user-friendly Web design.  It is also important to select pictures and colors that are consistent with the desired impression.  People make decisions based upon emotions.  Pictures and colors have a significant impact on emotions.

When these steps have been completed, you have a finished Web design.