My three favourite artists that fall under world are Dead Can Dance (who are almost the world equivalent of neo-folk, but very awesome), The Afro-Celt Sound System (who are more world-dance) and Ladysmith Black Mombazo (their traditional African stuff rather than their gospel stuff. Very relaxing, and also highly impressive).
World is generally just folk music from non-european countries however. Just as Country and Bluegrass are basically folk music from America. It generally comes in three types as well, I find. That is, proper traditional music (ie LBM), fusiony stuff, (Afro-Celts, Dead Can Dance) or incense-wavey smoke-a-jointy whale-songy New Age tosh*.
*At least I've not found any merit in this type.