Channeling Definition: The divine, inspired words (or energy) of God as imparted to Humans by Humans. - Lee Carroll (Kryon)

In conscious channeling, the instrument (person who acts as a channel) is consciously aware of the environment and interprets thoughts transmitted to him or her by the spiritual entity/entities into words.

In deep trance channeling, the instrument's consciousness departs temporarily and allows the spiritual entity/entities to use the physical body as a conduit to convey messages. The channel is unaware of what is being conveyed upon awakening/returning to the body.

It is generally agreed that all human beings are capable of channeling at some level - either consciously or subconsciously. Writers, artists and composers are often channeling in their works.

Channeled sources could be any consciousness such as your higher self, God, spiritual guides, ascended masters, angels, archangels, extraterrestrials, discarnate entities or animals, etc.

Also see topic: Is Channeling for Real?

Further Reading

Lee Carroll explains Channeling:
http://www.kryon.com/k_25.html#about

Orin and Daben on Channeling:
http://www.orindaben.com/db/dbstore/description.php?prodno=otc

Carla Rueckert on Channeling:
http://www.llresearch.org/library/a_channeling_handbook_pdf/a_channeling_handbook_01.pdf