Simply stated, mediation is a conciliatory process in which a third party supports the participants in reaching an agreement on their own.
The mediator provides guidance about the mediation process, but when it comes to the resolution of the substantive issues at hand, leaves that to the participants. This means the participants, not the mediator, are the decision makers.
Whether or not an agreement is reached is always voluntary, but participation in mediation is not always voluntary, and sometimes, especially in the workplace, it is mandated.
Ideally the mediator is both neutral (in that there are no compromising relationships) and impartial (in that there is no bias toward or against a particular solution). Most importantly, the mediator must be acceptable to the parties and possess the skills to be helpful.