Terrain and difficulty

There are two ratings for each cache: difficulty and terrain.

Difficulty

This is a measure of how hard it is to find the cache once you are at the location.

A number of people use Markwell's difficulty guidelines v1.1, which are:

A ten year old could probably figure it out without too much difficulty
An average adult would be able to find this in about 30 minutes of hunting
An experienced Geocacher will find this challenging, and it will take up a good portion of an afternoon.
An extreme challenge for the experienced Geocacher. May require in-depth preparation or cartography/navigational skills.
Mensa or equivalent

Terrain

This refers to the land you have to cross to get to the cache. Normally from the nearest 2WD road.

A number of people use the Scout scale:

Handicapped accessible
Suitable for small children; generally on trail
Off trail; requires some risk of getting scratched, wet, or winded
Off trail; likelihood of getting scratched, wet and winded. Probably requires special equipment (boat, 4WD, etc.)
Requires specialized equipment and knowledge/experience (rock climbing, SCUBA, etc.)

Of course, these are just rough guidelines, and with ½ stars, you can rate your cache as being a little from column A, a little from column B. For example, a cache that is not quite wheelchair accessible, but is otherwise "a walk in the park" would have a terrain rating of 1½.