'Roleplaying' means a lesser form of acting; it's like a combination of acting and writing. It means you strive to create a consistant beleivable personality, a 'second life' as it were, just like you would create a major character if you were writing a novel or movie.
That personality should have a history or at least a sense of history; it should know where it comes from. If you can't give specific incidents, then generalizations are useful as well - there is - or should be - a great deal of difference between a character that comes from the continent's largest city and one who comes from a remote forest hamlet. If there is not, something is very wrong.
It should have likes and dislikes and definable character traits, often different from your own. It should react and interact with it's environment. You the player should strive to invest the character with at least some aspects of what makes a person a person, instead of treating it like a mobile game peice. You the player should spend at least some time on character notes; how does this character - this person - feel about X? Some thought should have been given to their experiences. They should learn from the past.
'Game' means that there is a rules structure for handling how that character interacts with his world. There are set standards by which things happen, to at least attempt some fairness and, dare I say it, balance. Without some kind of rules structure, you're left with people that can think fast and improvise gaining an unfair advantage over those who are more laid back and thoughtful.
A game is not a rigid thing, though. That's why it needs a GM, to act as a go-between between the rules and the players.
It is not a simulation, but rather two or three steps back from that. Simulations stive to emulate the real world. Roleplaying games emulate the fiction that spawned them. Every strict simulationist attempt in RPG's has either been laughably bad or unplayable - or unplayed.