Undead are creatures brought back from the dead either by Necromancers, or in the case of the more powerful ones such as Liches and Vampires, through their own dark magic, or by an existing 'master' Undead. The Undead, as the name suggests, are not truely alive or dead, but teeter on the edge of true death, held back by powerful sorcery. In all cases the soul of the original creature is utterly destroyed and gone, although the more powerful Undead retain their memories and intellect.
Undead are a key tool in the arsenal of Necromancers, who have many ways to create, use and control them. Likewise Clerics, especially Clerics of Jeroth, are relentless in their desire to hunt them down and destroy them. Such Clerics have numerous tools at their disposal to aid them in their task.
Virtually all Undead are immune to cold damage, know no fear and cannot be stunned in any way. Corporeal Undead have shown a weakness to Bashing damage, but Incorporeal Undead seem to resist all physical attacks to a degree, necessitating Magical or Holy solutions.