Fingerstyle guitar is a method of playing the guitar by plucking the strings directly with the fingertips, fingernails, or picks attached to fingers, as opposed to flatpicking (picking individual notes with a single plectrum called a flatpick).
Wikipedia says the term “fingerstyle” is something of a misnomer, since it is present in several different genres and styles of music – but mostly, because it involves a completely different technique, not just a “style” of playing, especially for the guitarist’s right hand. The term is often used synonymously with fingerpicking, although fingerpicking can also refer to a specific tradition of folk, blues and country guitar playing in the US.
Music arranged for fingerstyle playing can include chords, arpeggios and other elements such as artificial harmonics, hammering on and pulling off with the fretting hand, using the body of the guitar percussively, and many other techniques. Fingerpicking is a standard technique on the classical or nylon string guitar, but is considered more of a specialized technique on steel string guitars and even less usual on electric guitars.
Because notes are struck by individual digits rather than the hand working as a single unit, fingerstyle playing allows the guitarist to perform several musical elements simultaneously. One definition of the technique has been put forward by the Toronto (Canada) Fingerstyle Guitar Association:
Physically, “Fingerstyle” refers to using each of the right hand fingers independently in order to play the multiple parts of a musical arrangement that would normally be played by several band members. Bass, harmonic accompaniment, melody, and percussion can all be played simultaneously when playing Fingerstyle.