In its most general sense, a panorama is any wide view of a physical space.
The word was originally coined by the Irish painter Robert Barker to describe his panoramic paintings of Edinburgh. Shown on a cylindrical surface and viewed from the inside, they were exhibited in London in 1792 as "The Panorama".

Panoramas are extensions of our horizontal field of view.  The horizontal field of view refers to how far one can look left and right without physically moving, similar to the way one can scan a room with his/her eyes without moving his/her head. The field of view is 50 degrees when stationary.

Beyond this to display a scenery wider than our natural field of view, we need to use specific methods and tools such as camera to generate a series of successive images and either scissors and glue or a specialized software called a 'stitcher' to stitches the images seamlessly into one single large space. 

We use the term 'large space' instead of wide space.   This is because the image may be composed of a series of photos taken in rows and columns, and from that generate a tall but narrow final image.  In that case the value of the panorama is in the vertical reproduction of a scenery all in providing a full horizontal field of view.

We use the panorama technique to deliver more visually effective rendering of a given space so as to provide the viewer with a more comfortable view of a given details or angle of view.  We use the panorama technique to emphasis on a specific aspect of a location or a construct or a space as a whole.

Here are links to more complete explanations for reference and additional reading about panoramas.

http://en.wikipedia.org/wiki/Panorama

http://en.wikipedia.org/wiki/Shuttle_Radar_Topography_Mission

http://en.wikipedia.org/wiki/Geographic_Information_Systems