According to the ALOA, that is the Associated Locksmiths of America, study group and list council the definition of master key is:
master key n. 1. a key which operates all the master keyed locks or cylinders in a group, each lock or cylinder usually operated by its own change key, 2. v. to combinate a group of locks or cylinders such that each is operated by its own change key as well as by a master key for the entire group, 3. n. an automotive key which operates all or most locks on a vehicle where there is also a valet key employed
For the sake of this article the first two apply. Automotive locks are another subject entirely.
To explain this better I have a diagram for reference. A master key system is just that. It contains a "Master" key or larger systems may contain more than one different "Master" keys that opperates the locks. The picture below demonstrates a single level master key system. Each knob has its own key that will not operate the other knobs, however, the master key will operate all knobs.