For people who have trouble with the abbreviation ARG, I frequently tell would-be players to “look it up” (with several examples, like the ARGnet site†) because that’s always the more comprehensive way to go.
I tell genuinely interested people, not likely to play, that it’s based on alternate realities the Player Master creates. Much like fiction writers who invent new situations, dramas, etc. Except PMs can interact with their creations and the players.
For the casually interested I tell them it’s an alternate reality game (or game). And if they espouse any interest at all, I explain to them what’s in the second paragraph.