This text is copied from http://www.photo.net/learn/optics/dofdigital/

Depth of Field -

What it is and what it isn't

Let's try to define depth of field. The usual definition runs something like this:

"The region over which objects in an image appear sharp".

While there is some truth in this, there's also some confusion - and some untruth too! Let's try a more accurate definition:

"The depth of field is the range of distances reproduced in a print over which the image is not unacceptably less sharp than the sharpest part of the image".

This definition contains some important points.

First, DOF relates to a print or other reproduction of an image. It's NOT an intrinsic property of a lens. If you put a lens on an optical bench you can measure focal length, you can measure aperture, but you can't measure depth of field. Depth of field depends on some subjective factors which I'll discuss later.
Second, note the phrase "not unacceptably less sharp". All parts of an image which come from outside the focal plane of the lens are blurred to some extent. Only one plane is in focus. As you move away from that plane things get less sharp. The depth of field limits are where the loss of sharpness becomes unacceptable - to a "standard" observer.
Third, note the phrase "..not unacceptably less sharp than the sharpest part of the image...". This covers the case of a pinhole camera. Such a camera has a very, very large depth of field (almost, but not quite infinite). However none of the image is sharp. The depth of field is large because all the image is equally blurred!
An important thing to note is that depth of field is NOT what some people think it is, i.e. a well defined zone over which everything is in sharp focus. Some people seem to have the impression that an image has two zones. In focus and out of focus. In fact there is only one point (actually plane) in focus. Everything else is out of focus to some extent.

Depth of field is also NOT directly related to background blur. Depth of field equations tell you over what range of distances objects will appear to be acceptably sharp (or at least not unacceptably unsharp). It tells you nothing about how much blur there will be of objects well outside the depth of field. That's governed by different physical parameters and determined using totally different equations.