From LQWiki

Userspace (or user space) is distinguished from kernel space. The Linux kernel is a specialized form of computer program. But whereas the kernel has a single unified view of the computer, and its resources (such as memory), programs that run in userspace are partitioned from each other. Virtually every program you use on a Linux system that is not the kernel runs in userspace.

One analogy might be a well-managed apartment complex where the back side of the building is a glass wall. Each family (userspace program) has its own apartment, which it manages as it sees fit. Families are not allowed to trash the apartments of other families living in the complex. The apartment manager (kernel) has final authority over the resources of the entire complex (the computer system), and can see the entire picture at once through the glass wall.

On Intel architectures, the kernel runs in ring 0 while userspace programs run in ring 3.