Mark Cuban discusses the definition (and extent) of click fraud. He gives several examples:
“[Click Fraud is] a click by a system or person on a page designed to circumvent the advertiser’s intent. In otherwords, advertisers are spending their money in order to get results. They have directed money to PPC advertising to get click throughs from their intended audience, to their intended destination.
If a kid on myspace says “click on the ads” to help me pay for XYZ, and they do, that’s click fraud.
If an ad shows up on a splog and the advertisers doesn’t want their ads on splogs. That’s click fraud.
If an ad shows up on a parked domain and the advertiser doesnt want their ads on parked domains. That’s click fraud.
If an ad shows up on a page thats part of an arbitrage scheme (buy clicks from a cheap PPC company, sell them using a more expensive PPC provider), that’s click fraud.”