Velvet is a soft fabric that can be in any color. You just want to stroke it with your hand because it is so soft. (Much like a mink's fur.) Velvet has a "nap", so when it is rubbed it looks different if it is stroked in different directions. It is expensive to use as clothing because you must be sure that you cut the material all in the same direction, or the nap may cause it look different.
It is hot to wear, so is best to use in the winter.
It's a way of making fabric, with short densely packed tufted threads cut to a very consistent length. This gives it it's characteristic very soft feel. Tufted means that the fabric has been glued or tied down.
Velvet was traditionally made from silk, but modern velvet is often made from cotton or synthetic materials (polyester, viscose, acetate, lycra, etc.) Velvet made mostly of cotton may be referred to as velveteen.
The technology to make velvet was very expensive for a long time, making it a rich man's fabric, only. Pile length could be doubled and gold or silk brocading added to enhance the rich sumptuous effect.
Velvet is manufactured on special looms that simultaneously create two different rolls of fabric. It is tough to clean at home. Best to send it to the dry cleaners.
Panne is a finish on velvet, making it look rather shiny, like velour. Velour is a knitted and less expensive to manufacture equivalent to velvet (threads knitted to achieve consistent length, not tufted).