What is a NICHE?

I hear the word over and over again like it's the be-all and end-all of marketing. Find yourself a niche. Target a niche. You can't sell unless you have a niche. It's starting to sound like one of those catch phrases people use when they want to sound like they know what they're talking about.

But I really have to wonder exactly what people mean by this.

I've always thought of a niche as a smaller section of a market. For example, office equipment is a market. Office equipment for companies with 5 or less employees is a niche. Or office supplies for people with cramped office space is a niche.

I look the word up, and I get this:

• a position particularly well suited to the person who occupies it; "he found his niche in the academic world"

• recess: a small concavity

• recess: an enclosure that is set back or indented

• (ecology) the status of an organism within its environment and community (affecting its survival as a species)

wordnet.princeton.edu/perl/webwn

The reason I'm getting confused is that suddenly everything is being called a niche. For example, something like dating sites. How is this at all a sector of a larger market? To me, this isn't a niche. This is a market, in and of itself. It is well established and has some very specific standards.

So either I'm old school on this, or I never quite understood what a niche was to begin with.

Your thoughts are appreciated.