What is Karma?
Karma is action.
The whole universe is constantly in a state of action or Karma. From the particles which compose the atom to the rotation of a spiral galaxy, all matter is always in a state of "flux", or motion.
Karma is the essential nature of Prakriti.
Dharma, the principle of evolution, depends upon Karma to be.
Karma itself is neither good nor bad; there is simply desire, action, and fruit of action. Stated another way, the action one commits is based on a particular desire, and the result of the action leaves an impression which contains the seed of another desire, thus modifying the original one.
This impression, or Samskara, determines the course of future actions as well as the results of those actions. In this manner, the world becomes a creation of ones individual Karma.
गहना कर्मणो गतिः ।
gahana karmani gatih
"Unfathomable are the Laws of Karma (action)"
-Bhagavad Gita 4.17