A limited government is defined as a government that is set up to have limited power over its citizens. A limited government has hard restrictions set on its powers and abilities. These limits have powerful effects on both personal and economic freedom.
A classic example that helps illustrate the idea of limited government is the government of the United States, which is constructed with restrictions that promote the freedoms of individuals as well as state governments. The first 10 amendments to the U.S. Constitution, which comprise the Bill of Rights, place hard limits on the powers of the United States government. For example, the Bill of Rights limits the government by guaranteeing that individuals have the right to free speech and the right to keep and bear arms. Should Congress pass a law that infringes upon these rights, the Supreme Court has the power to rule that law unconstitutional.
Limited government is a spectrum, so governments may limit themselves in completely different ways and to completely different degrees and still be described as limited. Indeed, outside of outright dictatorships, most modern governments are limited to some degree. For example, a government with no limiting provisions except for one that guarantees a fair trial still falls under the spectrum of limited government.