While many stories have unanswered questions, unlikely events or chance occurrences, a plot hole is one that is essential to the story's outcome. Plot holes are usually seen as weaknesses or flaws in a story, and writers usually try to avoid them to make their stories seem as realistic as possible.
Writers can deal with plot holes in different ways, from completely rewriting the story, to having characters acknowledge illogical or unintelligent actions, to having characters make vague statements that could be used to deflect accusations of plot holes (e.g. "I've tried everything I can think of..." to keep critics from asking why a particular action was not taken). The nature of the plot hole and the developmental stage at which it is noticed usually determine the best course of action to take. For example, a motion picture that has already wrapped production would much more likely receive an added line of dialogue rather than an entire script rewrite.
The viewing or reading audience notes a plot hole when something happens during the story that seems highly unlikely, or would be impossible to imitate in real life. It is usually seen as a mark of good writing or directing when a storyteller presents a story in such a way that the audience does not notice plot holes, or willingly chooses to overlook them in favor of enjoying the story. Of course, a mark of even better writing and directing is a film that has no plot holes whatsoever.