Central to most scenario based design is a textual description or narrative of a use episode. This description is called a scenario. The scenario is described from the user point of view and may include social background, resource (e.g. disk space, time) constraints and background information. The scenario may describe a currently occuring use, or a potential use that is being designed and may include text, video, pictures, story boards, etc.
By using a narrative it is possible to capture more information about the user's goals, and the context the user is operating in. The context might include details about the work place or social situation, and information about resource constraints. This provides some more help in understanding why users do what they do. In much current design work the users goals and context are often assumed implicitly, or may not be taken into account.
The scenario then becomes the design object or artifact and may be augmented and rearranged as the design evolves. It can become a hypothetical interaction scenario for a new design and allow better understanding of the new design. It is also desirable to maintain a history of past scenarios as a way of capturing past design rationale.
In one sense scenarios are not really new in design activity. It's extremely common in design to imagine "what if" situations, or to walk through a design in ones mind or in a group. Scenario based design is an effort to make some of what we do already more conscious and explicit.
The following is from a forth coming book on Scenario-Based design by John M. Carroll.
The scenario perspective Previous views concrete descriptions abstract descriptions focus on particular instances focus on generic types work driven technology driven open-ended, fragmentary complete, exhaustive informal, rough, colloquial formal, rigorous envisioned outcomes specified outcomes