An episodic game is one which releases its content over time, in level or mission packs ('episodes'). Episodic games often charge for each episode, attempting to sell players on the idea that the value of the game is in its content rather than its engine or gameplay.
Angry Birds is arguably an episodic game, although Rovio gives episodes away to existing customers rather than charge for them. Most pay-per-episode games, however, do not make an impact. The majority of players lose interest within 1 or 2 episodes. A few, psuch as Sam and Max, do manage to make some amount of revenue however.