What is the definition of allegory?

An Allegory is a form of extended metaphor, in which objects, persons, and actions in a narrative, are equated with the meanings that lie outside the narrative itself. The underlying meaning has moral, social, religious, or political significance, and characters are often personifications of abstract ideas as charity, greed, or envy.
Thus an allegory is a story with two meanings, a literal meaning and a symbolic meaning.

Examples

In illustrations, allegorical figures such as the Grim Reaper and Blind Justice represent the concepts of death and law, respectively.

In literature, a classic example is Herman Melville's Moby Dick, where the sea and the whale, and Ahab's actions, all represent elements of life and human behavior.