What are SharePoint Features ? Define the scope / levels of features?

SharePoint Features are part of packaging and deployment in SharePoint.
Features can be activated or deactivated in SharePoint. 
Features represent a set of functionality.
 

They have four possible scopes / levels

 

Farm- at the Farm level

Web application-  at the Web application level 

Site-  at Site Collection level 

Web-  at Single site level

 

A farm level feature is something that affects the whole farm, for example provisioning a custom timer job or deploying a Business Connectivity Services model.

 

A web application feature can be activated so that it only affects a single web application, and a typical example is a feature that modifies the web.config file.

 

A site scoped feature can be activated so that it only affects a site collection, an example being the deployment of a master page to the master pages catalogue.

 

Finally, a web scoped feature can be activated for a single site, for instance setting the default master page for that site.