What is meant by the term short circuit?

When a wire is cut in a circuit, a gap is made and the current can no longer circulate, known as an open circuit.

When 2 parts of a circuit touch, that shouldn't, for example - a wire comes loose and comes into contact with another part of the circuit, its shortening the route of the current in the circuit. So its a short circuit. When this happens 99.9% of the time the result will be a spike in amp's, so tripping any circuit protection, MCB's, fuses.

A good example of a common short circuit is faulty windings on a 3-phase electric motor. If the resin separating the windings becomes damaged it can cause 2 or even 3 of the motors phases to come into contact causing the motors overload protection to trip.