Fraunhofer diffraction is the name applied to diffraction, usually of light, that occurs in the far field. This basically means the light rays before diffraction and at the observing screen must be parallel. If you think in terms of wavefronts, they must be planar. This can be achieved in two ways:
- by using lenses to focus a point source at infinity before the diffracting object and another lens to focus the diffracted light after diffraction.
- by using distances between the diffracting object and the light source (and observing screen) that are large enough to make the deviation from planar wavefronts insignificant.
The reason for making the distinction between this and, say, Fresnel Diffraction for the near-field, is that because the wavefronts are planar the mathematics becomes much easier to follow. It's particularly useful for students, who can study the underlying reasons for the interference patterns observed without getting bogged down in some horrible geometry. There are, in fact, only a few special cases where Fresnel diffraction problems can be solved analytically.
The name comes from Joseph von Fraunhofer, who played about with this sort of stuff a lot.
Fraunhofer diffraction can be observed in Young's Slits experiment, where the light source is usually kept several metres from the slits, which are only separated by millimetres, thus the far field condition is met. | 
