A commodity is a thing outside ourselves (physical or not) that, firstly, satisfies a particular human want, but the want that it satisfies is not that of the individual(s) who produces it. It is exchanged with someone else who will either consume it himself or exchange it again. Secondly, a commodity is not the spontaneous produce of nature. A given amount of labor-power (time in which a producer has been hired to produce these useful items) must have been expended upon it to give it its shape and to bring it to a consumer. Thirdly, a commodity is only realized as such by the act of exchange. An item produced by human hands is not a commodity until it is exchanged.
The production of commodities forms the basis of the capitalist system. At it most simple, a capitalist invests money upon labor-power, resources, and means of production which meet to produce a commodity which the capitalist then sells to a consumer for, ideally, a greater quantity of money than he initially invested in its production.