The term "workshop," as it it used in most
college English departments (and in
creative writing graduate programs modeled after the one in
Iowa), refers to a process of
peer review of manuscripts. It is usually applied to
short fiction, although
essays and
poetry can come into play. Longer works are more difficult for a group of three to (on the outside) twenty young writers to review practically in the course of a typical face-to-face class session.
Typically, participants in the workshop receive a Xerox, printout, or electronic copy of the short work to be reviewed, and are expected to read it and make annotations and closing comments - almost as if they were a professor or teacher and were grading the story. These copies of the story are eventually handed back to the author, after the whole group has gotten together and talked about their comments and responses to the work. The author can then take all this information into account when creating a subsequent draft of the story.
Workshops are often fun and edifying for all involved, not just the author who's supposed to be deriving the benefit. In the hands of a smart professor, workshops can be the occasion for a tour of all kinds of literary associations and techniques. (They're also used in all sorts of non-classroom contexts, like casual writers' groups.) However, workshops can also become emotionally fraught, to the point where they are no longer useful. For example, some workshops institute a policy of author silence, to prevent knee-jerk defensiveness on the author's part. This rule often has the unintended consequence of making the workshop feel a bit like a shark cage, when the author's peers realize semi-consciously that they're free to attack with impunity.
According to some, workshops are also a contributor to a disease of sameness in American fiction. It's easy for an underprepared undergrad (or graduate... or professor, for that matter) to focus on the superficial elements of a story, and to make the mistake of believing that good writing should sound like everything the reader has read before (or like everything getting published lately by successful young writers). Taken together, these tendencies have allegedly caused a great deal of "good use of language" (florid, slightly mannered, description-heavy prose) to sweep over the landscape, leaving little room for rougher but deeper writing. There are also those who, less credibly, object to workshopping on some sort of noble artistic grounds, as dumbing-down or focus-grouping of literature.
Workshops are perhaps best regarded as a tool for a specific job, rather than a panacea or a gauntlet. Carol Bly, longtime writing teacher and author of Beyond the Writer's Workshop, recommends doing more introspection on (and deepening of) a work's psychology, connections, mythology, and internal order, before taking it to the workshop for what she calls "literary fixes."