Moonshine is an illegally produced distilled beverage

Distilled beverage

A distilled beverage, liquor, or spirit is an alcoholic beverage containing ethanol that is produced by distilling ethanol produced by means of fermenting grain, fruit, or vegetables...

. The word is believed to derive from early English smugglers

Moonrakers

Moonrakers is the colloquial name for people from Wiltshire, a county of South West England in the West Country.-Legend:This refers to a folk story set in the time when smuggling was a significant industry in rural England, with Wiltshire lying on the smugglers' secret routes between the south...

 and illegal Appalachian distillers who clandestinely (i.e., by the light of the moon) produced and distributed whiskey.
Moonshine is any distilled spirit made in an unlicensed still

Still

A still is a permanent apparatus used to distill miscible or immiscible liquid mixtures by heating to selectively boil and then cooling to condense the vapor...

. As with all distilled spirits

Distilled beverage

A distilled beverage, liquor, or spirit is an alcoholic beverage containing ethanol that is produced by distilling ethanol produced by means of fermenting grain, fruit, or vegetables...

, yeast

Yeast

Yeasts are eukaryotic micro-organisms classified in the kingdom Fungi, with 1,500 species currently described estimated to be only 1% of all fungal species. Most reproduce asexually by mitosis, and many do so by an asymmetric division process called budding...

 ferments

Ethanol fermentation

Ethanol fermentation, also referred to as alcoholic fermentation, is a biological process in which sugars such as glucose, fructose, and sucrose are converted into cellular energy and thereby produce ethanol and carbon dioxide as metabolic waste products...

 a sugar source to produce alcohol

Ethanol

Ethanol, also called ethyl alcohol, pure alcohol, grain alcohol, or drinking alcohol, is a volatile, flammable, colorless liquid. It is a psychoactive drug and one of the oldest recreational drugs. Best known as the type of alcohol found in alcoholic beverages, it is also used in thermometers, as a...

; the alcohol is then extracted through by means of distillation.

Because of its illegal nature, moonshine is rarely aged in barrels like proper whiskey, and it sometimes contains impurities and off flavors.