This article deals with Cold war as it relates to NationStates. For more general information, see the Wikipedia article on this subject.
A cold war refers to a war where direct military action is not being taken. Instead there is open yet restricted rivalry between (groups of) nations, often practicing different ideologies and political systems. Such struggles are called called "cold" because there is no direct fighting between the involved powers (a "hot" war) on a wide scale, though there may be fighting between proxies. Cold wars are often characterized by mutual distrust, suspicion, and misunderstandings.
Famous cold wars in NS were the longstanding tensions between The Reich and SATO. (SATO was originally developed to counter the growing influence of the Reich.) This resulted in various proxy wars, security patrols in the opposing alliances waters and attempts to destabilise nations in the opposing alliance. The tensions between SATO/WBO and CACE could also be described as a "cold war".
Another example, although lesser in gradeur and scope than the Reich/SATO cold war is the Drakonian Imperium/The Federated Klatchian Coast cold war. This resulted from the failed Nekoa Bay Negotiations.
Cold Wars can also take place within a single region. While obviously on a smaller scale to inter-regional conflicts, these periods of extreme tension can be just as bitter. The prime example of cold war on this scale was the long stretch of EDF/ComIntern tension in Europe. These two ideologically opposed camps, each composed of up to a dozen nations, faced each other in a series of minor skirmishes, any of whom could have led to thermonuclear war. Finally - after near misses such as the invasion of Jasp, the Myrth/Zoomany border crisis and, particularly, the EDF spy affair - the moderates in each alliance steered the region away from the brink and brought about a thaw in the cold war.