Anamorphism is a specific behavior of letterboxed pictures. If a picture with a wide aspect ratio is letterboxed on a 4:3 monitor, and when the same image is shown on a widescreen monitor, the aspect ratio is unaltered, but the black bars are either reduced or removed, it is said to be anamorphic. This behavior is very common for widescreen DVD movies, fairly common for cut-scenes in PC games, but very uncommon in proper gameplay of PC games.
Widescreen movies on DVD are often advertised as "anamorphic widescreen" or "anamorphic 16:9" or "enhanced for widescreen televisions." All of these mean the same thing. These screenshots show what The Terminator: Special Edition DVD R1 from MGM (advertised as "anamorphic widescreen") looks like on a 4:3 TV and a 16:9 TV.
The Chronicles of Riddick: Escape from Butcher Bay has anamorphic FMVs.
Condemned: Criminal Origins has anamorphic gameplay.