Direct from Wikipedia:
Native advertising is an online advertising method in which the advertiser attempts to gain attention by providing content in the context of the user’s experience. Native ad formats match both the form and the function of the user experience in which it is placed. The advertiser’s intent is to make the paid advertising feel less intrusive and thus increase the likelihood users will click on it.
Conceptually, native ads are the holy grail of advertising. Content that promotes business goals while at the same time being something that users actively want to engage with is a rare “win-win” in the world of advertisements. Pseudo-native advertising has been skulking around in forms such as product placements in television and movies, and as advertorials in magazines and online articles, and basically any product review ever written that was “sponsored” but not disclosed as such. These forms are not truly native given their propensity to remain overly intrusive and/or dishonest, and have really given what is conceptually a great idea a terrible reputation.