n. A literary genre that applies science fiction or fantasy elements to historical settings and that features steam-powered, mechanical machines rather than electronic devices.
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Arcanum is a prime example of steampunk, a subgenre of science fiction that explores the displacement of ancient ways by modern technology. Like Thief, with its steam-powered mechanical robot guards, Arcanum reconfigures the fantasy genre by imagining a past of magic and sorcery clashing with a present distinguished by advanced mechanical technology.
—Charles Herold, “Yielding (or Not) to the Magic of Exotica,” The New York Times, October 04, 2001
1987 (earliest)
Jeter, along with fellow novelists Tim Powers and James Blaylock, seems to be carving out a new sub-genre of science fiction with his new book. Whereas such authors as William Gibson, Michael Swanwick and Walter Jon Williams have explored the futuristic commingling of human being and computer in their "cyberpunk" novels and stories, Jeter and his compatriots, whom he half-jokingly has dubbed "steampunks," are having a grand time creating wacko historical fantasies.
—Michael Berry, “Wacko Victorian Fantasy Follows 'Cyberpunk' Mold,” The San Francisco Chronicle, June 25, 1987
Although there are antecedents, William Gibson's 1982 novel Neuromancer is generally considered to be the first example of a literary form called cyberpunk. This science fiction subgenre places computers, networks, and electronics (the cyber- part) inside a future that is anarchic and often dystopian (the punk part; from the anarchic, dystopian punk rock music of the mid- to late-70s). Move the setting to the past, especially the Victorian age, take out the electronics and replace them with mechanical devices, especially elaborate, steam-powered contraptions, and you have a new genre: steampunk.

Steampunk often imagines what the past would have been like if the future hadn't happened so quickly. It imagines, in other words, what engineers and inventors might have come up with if they'd had another, say, one hundred years to tinker with mechanical and steam-powered machines. (Some examples: a steam-powered flamethrower; a spaceship made of steel and wood.) In other cases, steampunk envisions a historical world that has modern elements. For example, in The Difference Engine, Gibson and coauthor Bruce Sterling imagine a late 19th century world in which Charles Babbage was able to build his "difference engine" — the first computer — and so the computer and communications revolution occurred one hundred years earlier than it did.

I should note, as well, that people are also describing other media as steampunk, especially video games and movies. For the latter, the steampunk label has been applied to films such as Wild, Wild West, Brazil, and even Edward Scissorhands.