Dictionary Definition:

“Relating to the spatial arrangement of atoms in a molecule, especially as it affects chemical reactions.”

Selected from OxfordDictionaries.com

Functional Definition:

Steric effects prevent a reaction from occurring because of a molecules structure and  orientation.  This includes regions of electronegativity that may be oriented closely together, or bulky side chains oriented closely together. For a molecule to be stable and able to react with other molecules its bulky side chains and regions of electronegativity should be as far away from each other as possible. If they are being pushed together the molecule is sterically hindered.

In the figure bellow  bulky side chains are oriented upward and are very close together. This closeness makes it hard for other molecules to get in close enough to react. This orientation makes the molecules sterically hindered.

Figure courtesy of Mwolf37 of Wikipedia Commons