Simply put, On30 is O scale models of narrow gauge trains which run on HO gauge (16.5mm) trackwork. In some magazines, you may see this referred to as On2½, Oe or some other designation. Those who pioneered this modeling in the early days preferred On30.
For me, the concept of On30 is simply a relatively inexpensive way to model narrow gauge trains in O scale, much as Dave Frary and Bob Hayden popularized inexpensive HO scale narrow gauge, by building HO models to run on N gauge track.
Inexpensive, however, doesn’t mean cheap or shoddy. A lot of incredible modeling is being done in On30, and, thanks to Bachmann, it’s now easy for the masses to enjoy as well.