The following definition is a modified version of the Canada Open Government Licence and Statistics Canada's Open License.
Open data is information that you are free to, "copy, modify, publish, translate, adapt, distribute or otherwise use . . . in any medium, mode or format for any lawful purpose." It is also allowable to sell, or sell value-added, information from open data sources.
Open data sources are often paired with a license that outlines their use. Always refer to the license before releasing a commercial application of open data.
From Government of Canada's Open Data 101:
Support for innovation
Advancing the government's accountability and democratic reform
Leveraging public sector information to develop consumer and commercial products
Better use of existing investment in broadband and community information infrastructure
Support for research
Support informed decisions for consumers
Proactive Disclosure