Hovercraft have been defined many different ways.  We can basically say that a hovercraft is a vehicle that uses a cushion of air to lift itself from the ground, and usually employs airflow to move around.  From there, a hovercraft can be many additional things.
      There are hover-pallets used in warehouses in place of standard pallets, which require very little effort to move.  There are simple flat-deck hover-barges, used for hauling things across fields, lakes, and other surfaces, which are sometimes towed or pushed by other vehicles.  There are massive ferry hovercraft that can accommodate hundreds of people, and that you can drive vehicles onto.  And there are small one and two-person hovercraft used for things like racing and ice rescue.  But from one to the next, and from large to small, all hovercraft have many basic things in common.

      First, hovercraft are technically referred to as "air cushion vehicles".  This gives us a good idea what we’re talking about.  Fundamental to a hovercraft is a cushion of air somehow contained beneath the craft, which suspends it above the ground.  This cushion of air is normally generated by one or more gasoline engines, although diesel engines are sometimes used, and even human-powered designs have been built.  The engine turns one or more fans or propellers to create airflow, which is then forced beneath the craft.  To maintain the air cushion, something needs to prevent the air from just blowing out the bottom, thus we have what is called a "skirt".
      The skirt is a flexible barrier that hangs below the craft, usually around the outer edge of the hull.  Hovercraft skirts can be made of many different materials, which are usually chosen for use at different temperatures or speeds, or for frictional characteristics on different surfaces.  They are commonly made of rubber, nylon, or other types of fabric.  The skirt can be a single unit, hanging around the entire bottom of the craft, or can be made of several individual segments, sometimes called fingers.  Both a one-piece or multi-segment skirt can be of many different shapes, but generally forms a compressed bubble-shaped air pocket the same size as the body of the hovercraft.  Whatever the material, and whatever the shape, the whole purpose is to maintain the cushion of air beneath the hovercraft.
      With a skirt in place, and air being forced into it by some means, we then have a vessel floating off the ground.  Next, we’ll want to propel the hovercraft and somehow control it.
      Propulsion is frequently achieved by allowing some of the air that is being forced beneath the craft to be directed out the back of the craft.  The other option is to have a second (or third, or fourth) engine separately provide thrust, leaving the first engine by itself to maintain the lift cushion.  Either way, we end up with propulsion being provided by more airflow directed out the back of the vessel.  To control direction, rudders are used in the path of the airflow, allowing the pilot to steer left or right, and sometimes to pitch the craft up and down.  These controls are like airplane rudders, and since hovercraft are actually airborne, drivers are often called pilots.  Hovercraft have more characteristics of airplanes than boats or cars.
      So there you have it.  First, hovercraft have some method of forcing air underneath the body of the craft.  This air is then contained under the craft by some type of skirt, which keeps the vehicle floating above the surface on a cushion of air.  Next, some method is used to actually move the hovercraft around and to steer in some capacity.

      Just to fill in the details - the air cushion is actually a dynamically moving pocket of air.  That is, rather than a static balloon filled with air, some air is in fact constantly escaping out under the bottom edges of the skirt, normally through a gap of an inch or two.  That’s why the fan(s) must keep spinning to force more air underneath as some escapes.  The idea is to minimize the amount of air escaping by having a well-formed and pliable skirt that shapes easily to any surface.  This means less energy is used to keep the craft floating off the ground, and in single-engine designs more airflow is then available for propulsion.