A placebo is a medication with no active ingredients or a procedure without any medical benefit. A placebo is often used as a "control" in one group of people in order to study the effectiveness of an experimental drug or treatment in another group of people by comparing the results.
In the past, a placebo (the proverbial "sugar-pill") was sometimes given to individuals as a "harmless" way to make them feel better. A certain percentage of people (historically 30%) report feeling better after receiving a placebo based on the suggestion that it may help, something known as the "placebo effect." Considered unethical now for that use, placebos are frequently used in clinical trials to study the effectiveness of new treatments and also control for the placebo effect, that is, eliminate the chance that any improvement seen is the result of suggestion rather than the treatment itself.