Groundwater is all the water that has penetrated the earth's surface and is found in one of two soil layers. The one nearest the surface is the "zone of aeration", where gaps between soil are filled with both air and water. Below this layer is the "zone of saturation", where the gaps are filled with water.
The process of absorbtion of rain water by the soil on the earth is called infiltration. By this process, the rain water that falls on the soil becomes ground water.