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Muggle
As Hagrid said in the first book that Muggles were "non-magic folk", that's pretty much it but what a Muggle is. Muggles are also people that live in the muggle (our) world without believing in magic. Most Muggles never gain the knowledge of the wizarding world, and if they do, their memories are erased.

Squib
A squib is somebody that lives in the magic world but doesn't have any magical powers. It's kind of like a person that can have the knowledge of the wizarding world, but no powers. They are like dogs on chains that can not reach what they really want.

Wizard
A wizard is somebody that believes in magic, lives or knows about the magic world and has magical powers (the best way to be).