Interaction is the computer’s competitive advantage, a cyclic conversation between the user and the machine in which each participant listens, thinks and speaks. These simple conversations, combined with Moore’s Law, have weaved this technology so deeply into the fabric of our societies that it is hard to imagine a life without them.
Storytelling is one of the most ancient forms of communication, spanning over four thousand years of human evolution. From Gilgamesh to Ulysses, from The Odyssey to Star Wars, people have used stories to share life experiences and learn through real or imaginary tales.
Interactive storytelling is a nascent form of entertainment that uses the computer as a medium to allow readers to create or influence a dramatic storyline through small, significant actions.
This definition is broad because this form of expression is still in its infancy (some might even say it’s waiting to be born).
The general attitude seemed to be that the stage of the art is still too undeveloped to permit us to reliably narrow our thinking; we must instead pursue all possible avenues of discovery before we can say what interactive storytelling really is. – Chris Crawford on Phrontisterion 2012
It appears that there might be more things in heaven and earth than are dreamt of in our philosophies.
Welcome to the drama.
Phrontisterion Online 
That’s an excellent definition!
Chris has posted some additional thoughts on the subject on his site.