Basic Information
This is a firearm action in which the operator may pull and hold the trigger and the weapon will continue to discharge and reload itself until the trigger is released1 or until the ammunition is exhausted. This should be contrasted with semi-automatic action in which the weapon re-loads itself and requires a further trigger pull to dishcharge again and single action where the operator has to do everything himself.
Strictly speaking this term shouldn't be applied to mechanically driven weapons like early gatling guns or modern chainguns, but normally is.
The fully automatic action is characteristic of machine guns - indeed some don't give any other option - and some sources will report anything that fires fully automatic as a machine gun, but numerous other types of weapon carry it as well, often as part of a selective fire design, ranging from cannon down to pistols.
Note that the fact that your weapon is capable of fully automatic fire, does not mean that it is a good idea to use it - or at least, to use it at its full capacity. For a start, fully automatic fire uses ammmuntion really quickly and you're unlikely to be carrying that much. Next, it will generate a fearsome amount of recoil and vibration so you're less likely to hit anything in particular. Also, it will generate a great deal of heat, typically a lot faster than the weapon has any hope of dispersing it which can cause anything from softening of (and consequent damage to) the barrel, injury to the operator and spontaneous detonation of chambered rounds. Finally it puts a lot of stress on the weapon. A proper machine gun is probably2 built to cope with all of this, but your assault rifle (for example) shouldn't be used on full auto except in extremis and a fully automatic pistol is more an excercise in perverse ingenuity than a sensible weapon.