Sunnah means the way of the Prophet Muhammad (peace and blessings be upon him). It includes everything he said, did, and approved of. We know the Sunnah from the statements called Hadiths that have been handed down from the Companions of the Prophet.
Islamic Law is taken from the Qur’an and Sunnah. The Sunnah in this sense both explains the Qur’an, and also gives additional rules and guidance. The Qur’an in many places tells us to obey the Prophet (peace and blessings be upon him), and thus it is wrong—as some deviant sects claim—that the Qur’an is sufficient and that we do not need the Sunnah.
According to Islamic jurists, the Sunnah is second to fard. Fard means something is obligatory and it must be done; to neglect it without any excuse is a sin. The Sunnah is divided into confirmed (Sunnah mu’akkadah) and optional (Sunnah ghair mu’akkadah). The confirmed Sunnah also should not be neglected, though it is not as important as the fard. The optional Sunnah is recommended, but if someone neglects it, there is no sin or blame on that person.
Sunnah Prayers refer to the additional ritual Prayers (Salah) that are recommended before or after the obligatory (fard) Prayers. It is not necessary to perform these additional Prayers, but it is highly recommended to do so. This is because we will be rewarded for imitating the Prophet (peace and blessings be upon him), and because, on Judgment Day, those Sunnah Prayers will compensate for any obligatory Prayers that were missed or not accepted. For each of the obligatory Prayers, there is a certain number of rak‘ahs of Sunnah Prayer to be performed before and or after the obligatory ones.
Sunnah can also refer to those things that the Prophet (peace and blessings be upon him) did in order to bring himself closer to Allah, in contrast to those things that he did simply out of habit or custom. So, for example, the Prophet (peace and blessings be upon him) slept on a simple mat out of habit or custom. We are not required to follow him in this. But he also went to sleep on his right side and advised us to do the same. Thus sleeping on the right side is a Sunnah, something he did to please Allah.
Another example of the latter is that the Prophet (peace and blessings be upon him) ate with his right hand because Allah ordered him to do so; thus it is a Sunnah (in this case, obligatory, based on another Hadith) for us to eat with the right hand. But the Prophet (peace and blessings be upon him) also ate with his fingers because that was the custom at the time. Thus, it is not a Sunnah for us to eat with the fingers, and there is nothing wrong in using a fork, spoon, or chop sticks.
Sunnah sometimes means a legitimate thing, in contrast to bid‘ah, which is a rejected innovation in religion. To say that an act of worship is Sunnah would mean that the Prophet (peace and blessings be upon him) did it that way, not that it was later invented by others. So, for example, one may ask whether it is a Sunnah to use prayer beads (misbahah) to count the utterances said in dhikr (remembering Allah), which would mean the same as asking whether the Prophet (peace and blessings be upon him) used prayer beads and whether doing so is a rejected innovation. (The answer is that he himself did not use them, so it is not a Sunnah. However, several of his Companions used pebbles or date stones to count their prayers and he did not disapprove, so neither is it is a rejected innovation.)
Thus we can see that the Sunnah has several related meanings. The way of the Prophet Muhammad (peace and blessings be upon him) is the way that should be followed by Muslims.