The hashtag is a feature of Twitter that consists of a hashtag symbol # directly before a relevant keyword or phrase (no spaces) in the body of a Tweet to categorize the Tweets for Twitter Search. It is simply a way for people to search for messages on Twitter that have a common topic. The hashtag also is useful to track tweets and conversations and provides a means of measuring the performance of a Tweet topic.

Some of the features of a hashtag are:

• Hashtags can appear anywhere in a Tweet (message). They do not need to be grouped at the end of the message.
• Hashtags are not case-sensitive (i.e. #SEOtalk is the same as #seotalk).
• Spaces are not allowed in hastags. Numbers are allowed but punctuation marks are not supported.
• There is no preset list of hastags. Any word or word combination can be used.
• Clicking on a hashtag in a message provides a list of all recents messages that contain the same hashtag.
• Hashtags are are key to trending topics.

While Twitter is the source of the hashtag, hastags also are supported by other Social Media platforms like Facebook, Google+, Pinterest, Instagram and Tumblr.

Note: the 'Hash' (#) is sometimes referred to as the 'Pound Symbol' or 'Chicken Scratch'.

Further reading

Twitter list of best practices

The Beginner's Guide to the Hashtag