A tsunami is a large sea wave that forms when an area of the ocean floor is displaced. They are often called tidal waves, but they are not actually caused by tides. Tsunamis often occur when part of the ocean floor moves during an earthquake. Movement of the ocean floor moves a huge volume of water, which causes a tsunami. The diagram that I have included is a simplified drawing of how thrust faulting in the ocean forms a tsunami. This is basically the type of mechanism that caused the 2004 Sumatra tsunami.

A tsunami happens whenever something moves in water and forces water out of the way, or if a hole under water allowing water to fall into a hole. When you are in a bathtub, quickly move your arm under the water - you will see a small ripple move that will reach the edge of the tub and lap up. This is a small tsunami. Now, if you have a large section of the ground move instead, then you'll get a big tsunami, one that can cause a lot of damage.