In the Harry Potter book series, a Muggle is a person who lacks any sort of magical ability and was not born in a magical family. Muggles can also be described as people who do not have any magical blood in them. It differs from the term Squib, which refers to a person with one or more magical parents yet without any magical power/ability, and from the term Muggle-born (or the derogatory and offensive term mudblood), which refers to a person with magical abilities but with non-magical parents. The equivalent term used by the in-universe magic community of America is No-Maj.
The term Muggle is sometimes used in a pejorative manner in the books. Since Muggle refers to a person who is a member of the non-magical community, Muggles are simply ordinary human beings rather than witches and wizards. According to the author, J. K. Rowling, a quarter of the annual Hogwarts intake have two non-magical parents; there have also been some children known to have been born to one magical and one non-magical parent. Children of this mixed parentage are called half-bloods (strictly speaking, they are 'Literal Half-bloods'); children with recent Muggle ancestry on the one side or the other are also called half-bloods. The most prominent Muggle-born in the Harry Potter series is Hermione Granger, who had two Muggles of unspecified names as parents. A witch or wizard with all magical heritage is called a pure-blood.
In the Harry Potter books, non-magical people are often portrayed as foolish, sometimes befuddled characters, who are completely ignorant of the Wizarding world that exists in their midst. If, by unfortunate means, non-magical people do happen to observe the working of magic, the Ministry of Magic sends Obliviators to cast Memory Charms upon them causing them to forget the event.