The Arabic word hadeeth basically means ‘an item of news, conversation, a tale, a story or a report,’ whether historical or legendary, true or false, relating to the present or the past. Its secondary meaning as an adjective is ‘new’ as opposed to qadeem, ‘old’. However, like other Arabic words (e.g. salaah, zakaah), its meaning changed in Islaam. From the time of the Prophet (r), his stories and communications dominated all other forms of communication. Consequently, the term hadeeth began to be used almost exclusively for reports that spoke of his actions and sayings. [1]
The term Hadith covers not only the sayings of the Holy Prophet, but also his actions as well as what he tolerated among his companions. By toleration we mean the seeing by the Prophet of a thing being done by a companion of his and keeping silent over the deed or even explicitly approving it. Each of these three categories finds a place in the books of Hadith. [2]
References:
1- Usool Al Hadith, Dr. Abu Ameena Bilal Philips
2- An Introduction to the Conservation of Hadith, Dr. Muhammad Hamidullah, Islamic Book Trust 2003, Page 19