What is the meaning of diffusion in biology? Please describe it in a way in which a seventh grader can understand.

Diffusion is a process that involves random movement of molecules from where they are concentrated to where they are less concentrated. Eventually, when the molecules are equally distributed in the solution, it has reached an equilibrium.
An easy example to visualize is if you dropped some red food coloring into a glass of water. Without stirring it, the dye would start to spread out in all directions. Eventually, if you looked at the glass of water hours later, the red dye would have spread throughout the water. No input of energy is required for this to happen. Diffusion is called passive transport because particles move constantly on their own. 
Another practical example of diffusion is when someone passes a bakery and the smell of baked goods seems to spread in all directions through the air. The higher concentration of the odor is inside the bakery relative to the air outside the bakery and thus diffusion occurs from high to low concentration.
In order to stay alive, cells require substances to enter or exit and sometimes the process of diffusion is how these molecules are transported.
Cells are surrounded by cell membranes that are selectively permeable. This means that certain molecules are allowed to pass into or out of a cell. Molecules of water are able to diffuse across a cell membrane as long as there is a higher concentration of water on one side of the membrane relative to the other.  So, if a cell is placed in a drop of water, there will be more water outside the cell compared to inside. Diffusion will occur from high concentration (outside the cell membrane) to lower concentration (inside the cell) and the cell will gain water and swell in size.
These are just three examples of the process of diffusion. This process requires no additional input of energy and relies upon the random movements of particles in a solution. I have included a link to an excellent animation demonstrating the process of diffusion.
 
 
http://highered.mheducation.com/sites/0072495855/student_view0/chapter2/animation__how_diffusion_works.html