Matcha is tea leaves that have been pulverized into a powder form. (Traditionally based on green leaves - we do have some non-traditional matcha powder based on white tea leaves)
Traditionally matcha is based on leaves harvested from the gyokuro bush. Prior to harvesting (2-3 weeks prior) the bush is shaded from direct sunlight. Leaves are picked (harvested), steamed, and then dried. The stems and veins of the leaves are removed during the drying process. Finally, all of the leaves are ground into a fine powder to complete the process.
Matcha is unique in that the powder is dissolved into hot water and frothed up by a whisk. The result is that when you drink a cup of matcha tea you are completely ingesting the tea leaves.