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Role Play
When one or more people take on the role of a character that is in some way, large or small, different from their real selves, and through those characters act out fantastical adventures. The resulting communal story might be any genre: fantasy, sci-fi, horror, action adventure, romantic comedy...
In Character
When someone is "in" character, they are acting out the ways they believe their character would respond in a given situation. Just like an actor taking on a role, the things that they say and do while following the script may not reflect their own beliefs or personality. Someone who is IC is engaged in writing a communal story. Just because their character is the villain of the story does not mean that the character's player is a villain in real life.
Out Of Character
When someone is "out" of character, that means they are speaking as themselves and are not pretending to be anyone else. They aren't playing.
Real Life
Lives that people lead when they are being their real, OOC selves. Their OOC selves may like to spend a lot of time RPing, which is indeed part of RL, but not the only part. Also sometimes referred to as "meat space" to reflect that the bulk of what is considered to be "real" occurs away from our favorite glowing picture boxes.