Preferred stock is a class of capital stock of a corporation that ranks above common stock as to dividends or liquidation or both. When we say preferred stock "ranks above" common stock as to dividends, that means that dividends cannot be paid on the common stock until they are paid on the preferred stock. When we say that preferred stock "ranks above" common stock on liquidation, that means that if the company were liquidated (assets sold off, debts paid and proceeds distributed to shareholders), preferred stock holders would receive their liquidation preference before holders of common stock receive anything.
One important difference between preferred stock and common stock is that preferred stock is usually created pursuant to a detailed contract set forth in the articles of incorporation or a board resolution (called a certificate of designations in Delaware). Common stock, in contrast, generally does not have a detailed contract listing its rights and powers, instead relying on the Board's general fiduciary duties as protection. Thus, even though preferred stock is equity, it is similar to debt in the sense that both debt and preferred stock tend to have their rights specified largely by contract.
Preferred stock is often issued in series within the class, such as Series A, Series B, Series C, and so forth. This is particularly common with venture capital backed companies that need multiple rounds of equity financing. These series may have different levels of priority amongst themselves.