This is one of the most confusing, obscure, and misunderstood speculative genres. I like how agent Ginger Clark put it in her interview on Cynsations: "...there is no such genre as sci-fi/fantasy. It's either science-fiction or fantasy. (Unless it's science-fantasy, and I can sense your head is exploding, so never mind!)"
The 2009 Guide to Literary Agents defines science-fantasy this way: "a blend in which fantasy is supported by scientific or pseudo-scientific explanations." I think this is the best definition I've found to-date, simple and precise.
Most people automatically think of Star Wars with it's use of advanced technology plus the mysterious Force. For a more recent and better example might I suggest Brandon Sanderson's Mistborn Series or Warbreaker where the fantasy elements have pseudo-scientific explanations and rules. When you really get into the explanations and figure out what defines science-fantasy what you discover is that there are a lot of books that straddle science-fiction and fantasy but to really be defined as science-fantasy you can't just throw together laser guns and elves. Many people try to get away with defining their work as sci-fi/fantasy without having the actual pseudo-science involved and the fantasy elements that make up the difference to replace realism.
World-building wise, you can have a futuristic or current setting, or a medieval one. Science-fantasy straddles the genres here. Races, languages, customs, and what-not are also fair game. What isn't is the science and fantasy melding that makes and breaks the rules of your world. Without that, then yes, you've got a sorry hodge-podge sci-fi/fantasy Frankenstein that will be very hard to define unless it plays into the direct rules of some other speculative subgenre. Don't classify it as science-fantasy and never use the term sci-fi/fantasy in a query letter.
The debates are heated; especially among purists who'd either resign all science-fiction with fantasy elements to a junk pit which they designate as science-fantasy or would rather ignore the subgenre all-together. Regardless of how they feel, it is a valid subgenre, recognized by both the publishing and movie industry. Defining it is trickier and writing science-fantasy on purpose isn't as easy as one might think.
Now for some links to showcase the debate, to define, and to help you understand:
Fantasy Magazine does a wonderful job defining the three levels of science-fiction (of which science-fantasy is #3) in this article.
John Scalzi writes regarding the negative attribution of calling some films science-fantasy vs. science-fiction when in fact both are subgenres of fantasy, so there you go. Fun read, even if it blurs the lines a bit more.
The SF Site lists several main genres and subgenres of speculative fiction, including science-fantasy for a brief, clear-cut explanation.
There's even a Science-Fantasy fan page on Facebook you can like! And yes, they have an explanation regarding the subgenre too.
On Tia Nevitt's blog Heather Massey guest posts regarding science-fantasy and makes some very valid points.
Intergalactic Academy sheds even more light on what is science-fantasy here.
After researching a bit, can you think of a good example of a science-fantasy book that you've read? Share it in the comments.