NPC, or Non-Player Character, is a term used to describe characters that aren't directly controlled by a player.
Commonly the term is only used to distinguish between NPCs and avatars with spacecraft berthes. Avatars can hold any berth on board a spacecraft that a NPC can hold; such as passenger, troop, crew, and officer. So some times a clear distinction needs to be made.
There are a number of different types of NPCs. While some may act similar, they are treated differently by the game.
These types are:
The demiavatar is an exception because it acts as both an avatar and a NPC, depending on if a player is logged in on the demiavatar.
For more information, see the Demiavatar page.