I'm a bit of a stickler for using labels correctly, so I've often been a bit miffed at folks who use the label sword & sorcery in a loose and inaccurate way. Sword & sorcery is a specific sub-genre of fantasy, and it has some very specific tropes and conventions that make it sword & sorcery and not some other form of fantasy, such as high fantasy, or contemporary fantasy, etc.
For my money, the Wikipedia entry on sword & sorcery is pretty good (Wikipedia tends to do pop culture fairly well in general) but not perfect. So, here's my own take on what the genre means, serving in particular as a kind of critique of the Wikipedia article. My interest in posting this about the genre is largely due to the fact that I've been re-reading some of it lately, and Jeffro's Appendix N series of articles have also brought it out again to the forefront of my conscious, and sent me on a further search of other discussions about the genre.
For many years, although I had read and enjoyed a lot of sword & sorcery, I was really more a fan of high fantasy—a legacy of my love of Tolkien, of course. Like many fantasy fans, even if I'm much more widely read than Tolkien and Tolkien-clones, it's hard to get out of the shadow of the master.
Sword & sorcery, especially among the D&D playing crowd (and especially among the OSR contingent of the D&D playing crowd) is usually contrasted with high fantasy, but that's not entirely accurate. Lloyd Alexander coined the term high fantasy and when he did so, he made the point that it meant the presence of a "secondary world" as the setting, as opposed to the "primary" or real world, but just with magical and/or supernatural elements added to it. If this is the case, than iconic sword & sorcery stories, like Conan (the Hyborian Age qualifies as an entirely fictional world in my book), Fafhrd and the Gray Mouser, and Elric—among others—qualify as high fantasy. Since high fantasy has evolved to pick up more than what Alexander originally defined it as, then I think we can certainly say that sword & sorcery is not a subset of high fantasy, but in some ways is an opposite corner of the foundation of the fantasy genre overall.
Sword & sorcery as a label is credited to Fritz Leiber, one of the authors of some of the most iconic stories within the genre, in 1961 where in fanzine Ancalagon and later again in fanzine Amra he described where the term came from. the term deliberately mimics the genre labels of cloak and sword (historical swashbuckling adventure) and cloak and dagger (international espionage) and almost certainly also mimics the genre label sword & sandal (which was popular in cinema at the time).
Immediate sources (which brought traits that are inherent to the genre) include the picaresque stories, which James Maliszewski noted in a post I linked to last time, as exemplified by the anonymously published Lazarillo de Tormes or Guzmán de Alfarache. This includes a kind of incipient noir-like bent; charming roguish protagonists, decadent urban wretched hives of scum & villainy as a setting, and a kind of worldly, individual-stakes type story at the heart of it—bildungsroman type stories, or save the world epics aren't really very appropriate. Very similar historical swashbuckling romances, like that written by Dumas, Sabatini, Kipling, Mundy, Lamb, or even Robert E. Howard himself also feature strongly into the origin of the genre; it's fair to say that Howard created the Hyborian Age largely because he wanted the freedom to tell the kinds of swashbuckling heroic historical adventure stories that he was already writing without the constraints of putting it in an actual historical time and place gave him; in fact, he very specifically said as much.
Other fantastic stories of the time, such as Haggard or Burroughs' descriptions of an exotic and fantastic Africa as explored by Allan Quatermain or Tarzan are also influential; the notion of being an outsider exploring a society that—to the readers, and even to some extent to the protagonist(s)—is strange and exotic is crucial to the genre. As Eric Diaz noted not too long ago, you can almost say that the entire point of a sword & sorcery story is to explore the setting; sometimes even at the expense of an interesting protagonist, but certainly at the expense of a protagonist who undergoes any type of real transformation. The stories are less about the person and more about what he does.
A heavy dash of Orientalism (before Said ruined the term by applying the absolutely ridiculous critical theory and deconstructionism techniques to it to basically call it racist—the last salvo of the non-intellectual narcissist looking to ruin anyone and everyone happier than himself) is usually apparent. The Arabian Nights-like stories, and their imitators such as Beckford's Vathek are hugely important; from here we get not only more of the picaresque setting, but also such staples as the monsters and other supernatural elements in the wilderness, the shady, untrustworthy sorcerers lurking on the outskirts of society. Note the contrast between the Arabian Nights and Vathek inspired magicians and the more high fantasy style, which owes much to Merlin, official adviser to King Arthur, and Gandalf, a benevolent and friendly wizard. In sword & sorcery, there's very rarely a friendly wizard, and even if there is, he's weird, inhuman, inscrutable, and his motives are untrustworthy (for great examples here, see Ningauble of the Seven Eyes and Sheelba of the Eyeless Face from the Fafhrd and Gray Mouser stories.) This evolved somewhat over time, so that some sword & sorcery heroes, such as Elric and Kane are accomplished sorcerers. However, I will point out that the whole point of the Elric stories was that it was stereotype reversal—Elric was meant to deconstruct sword & sorcery to some degree by being the anti-Conan counter-stereotype, and as such, doesn't really deviate so much from the form as reaffirm it. And Kane was specifically called, by his author, as "not a sword and sorcery hero; he is a gothic hero-villain from the tradition of the Gothic novels of the 18th and early 19th centuries".
It's worth noting that while the supernatural horrors outside of society is a strong feature of the genre, as borrowed from the Arabian Nights type story, in its original form (i.e., as told in stories written by Howard, Smith and the first wave of sword & sorcery writers who invented the genre) these horrors are specifically Lovecraftian monsters, not Gothic horror type monsters.
My own label, SWORD & SANITY, which I borrowed from Shane Magnus who coined it, is meant to reiterate this very basic, original form of the genre; it's secondary world fantasy, told with a sword & sorcery style, and Lovecraftian horrors. This is only necessary because as other writers dipped their toes in the water, the Lovecraftian horror became very watered down, and few subsequent writers continued to develop it.
Finally, it's worth noting that although the high fantasy mode is novels—often series of very long novels, in fact—the original mode of sword & sorcery was the short story or at most the novella. This isn't necessarily true; James Silke's Horned Helmet series, for example, is a series of four novels that is quintessentially sword & sorcery, not high fantasy. The list of examples given in Wikipedia is fairly useless; many of the works cited are not really sword & sorcery at all, but rather represent SJW entryists who came to the genre seeking to remake it rather than exemplify it. I mean, really—Samuel Delaney? Imaro is an important figure in the genre; the stories that for years and years and years nobody could really sell (a condition which persists, by the way)? The article then goes on about other banalities, like women characters and women writers—stuff that has absolutely nothing whatsoever to do with the genre, and is only of interest to purveyors of agitprop. It does, however as a footnote, make note of the fact that by substituting super-science for supernatural, as in planetary romance or sword and planet, you get material that looks exactly like sword & sorcery, yet which doesn't qualify, because arbitrarily it is binned to science fiction instead of fantasy, but the article does, almost inadvertently, make the point here that the Weird Tales tradition from which all of these sprang did not make much of those distinctions; those are the constructs of those who came later. And since the "science" of such science fiction is more often pseudo-science, the difference becomes even more esoteric and arbitrary.