Photo credit: jimbrickett
This term is often used when talking about French wines, and in fact, the French believe strongly int the concept of terroir. This French word refers to "the total impact of any given site -- soil, slope, orientation to the sun, and elevation, plus every nuance of climate including rainfall, wind velocity, frequency of fog, cumulative hours of sunshine, average high temperature, average low temperature, and so forth." This definition was written by Karen McNeil in The Wine Bible and I've found none better.
Often terrior and soil are used interchangeably but as the above description indicates, that would be a mistake. The French, those in Burgundy in particular, believe so strongly in the concept of terrior that they do not have a word for winemaker. Rather, the vigneron or vine grower's duty is to express the terrior. It is their job to read the weather, the grapes and the environment and determine the right steps to take to create that ultimate expression.
This concept is not without debate. For example, some believe the presence and abundance of eucalyptus trees contribute to the often detected mint flavors in Australian Shiraz. Others say if that were true, we should be able to taste the exhaust from all the traffic in Napa Valley Cabernet.
Personally, I'd like to think that environment would make a difference. I'd like to think a tomato grown in my gardern (if I had one) would taste different (and better) than one grown with hydroponics. Perhaps I just like the romantic notion of it. Afterall, I still prefer real corks even though there's plenty of evidence to suggest screwtops are a better closure.