Bug

A bug is an error. Something that's gone wrong in the game. It can be a small bug where it only causes a Minor issue. An example would be a smokepillar that's the wrong color. It doesn't affect the gameplay much. A Major issue would be that the smokepillar causes performance issues so the framerate drops too low. A Critical issue would be a smokepillar that crashes the game on load.

Bugs are often tracked in Jira or similar software: https://www.atlassian.com/software/jira

A bug can be reported by anyone but often they come from the QA team as it's their job to find them to make sure they get fixed, ensuring the best possible experience for the gamer.

There are various ways of handling bugs and how they are choosen depends on the state of the project. Obviously in an ideal world you'd fix them all. That's impossible. So when you get closer to the end of a project you start focusing on the higher priority bugs. The Majors and Criticals. Anything less important will be marked KS. Known, Shippable or Will Not Fix. It's rough, but it's part of development.