A mixtape or mix cd is a album with usually the latest cuts "mixed" or blended in a continuous mix. They come in different forms, you have your mainstream mixtapes (like DJ Clue, Funkmaster Flex), your underground mixtapes (like DJ Premiere), turntablist tapes (like DJ Craze, Qbert) and ones that combine all three (like Triple Threat DJs, Beat Junkies). These usually contain DJ battle routines and sets and can contain freestyles or exclusives from emcees.
Since technically mixtapes/cds are considered illegal by labels (since they are basically compilations and contain unlicensed tracks) they are usually labeled "for promotional use only" similar the promo vinyl or CDs. Back in the day Djs would make the master mixtape and then dub a few hundred copies and take to the local mom & pops store and sell them on consignment . Nowadays Djs will usually mix to computer and burn CDRs. And like "battle break" records they are usually released without a barcode.
Funkmaster Flex was the first to release a fully sanctioned mixtape on a major label with his "60 minutes of Funk vol. 1" Since then you've seen more "official mixtapes" released.
Usually the labels look the other way because mixtapes are seen as a great promotional tool for breaking new artists and new material. That is how many an artist has gotten their break. An example of this is Fabulous who DJ Clue put on his tapes before anyone else even knew who he was. Artists also use mixtapes to keep their name hot inbetween albums or during times when they and their label aren't on good terms (like Rass Kass, Whoriders, Hieroglyphics, etc.)
Hope that answers your question