A step sequencer is a part of many synthesisers and drum machines. You can program in a list of notes you want it to play, and it will play them one after the other at whichever speed you specify. You can tell it to miss notes, to glide from one to the next, and with some step sequencers you can tell it to alternate between two speeds to get a swing effect.
Step sequencers work as if monophonic, playing one note at a time. Even a step sequencer that can play several notes at once will work as if playing several separate monophonic instruments independently of each other, with you providing a separate list of notes for each of the instruments.
Step sequencing is the antithesis of expressive musicianship. It's quantised, digital, robotic and precise. It's literally perfect, the logical conclusion of the geometric, Platonic ideal of electronic music.
Wendy Carlos and Vangelis probably hate step sequencers. Their music is very expressive and emotional. Despite the out–of–hand dismissal of synthesisers by more traditional musicians, these artists play tangible keyboards, and their performances are just as human as that of a musician playing the piano. They speed up and slow down their playing for emotional impact, and if the instrument permits it, they take great care to strike the keys hard or softly enough to produce an appropriately bright or dull tone.
Juan Atkins, Trevor Horn and Anne Dudley probably love step sequencers. Their music is very strict and rigid sounding. It explores soundscapes, rhythms and patterns, but does not particularly evoke emotions. Their fans are more likely to dance to their music than to sit down and listen to it.
Once different synthesisers were standardised enough to talk to each other, step sequencers were sold as products in their own right. These don't directly make any sounds, but instead play your synthesisers on your behalf, keeping them all in perfect, rigid timing with one another. A good example of this antiquated technology is the Roland MC-4 shown on the record label of AFX's EP Analord 01.
As the technology was improved, these were replaced by hardware sequencers that could record the notation of every nuance of a real musician's playing. These in turn gave way to software sequencers with the release of the Atari ST home computer with its built–in MIDI ports.
The step sequencer is not inherently good or bad. It's merely a certain style of playing that takes all human emotion out of the equation. This makes it suitable for idealistic, geometrically perfect music, and equally makes it unsuitable for emotional, expressive music. I for one am glad to live in a world which has both.
To hear some prominent examples of step sequenced music, check out Tangerine Dream's Phaedra, The Art of Noise's (Who's Afraid of) The Art of Noise?, and Model 500's Deep Space. Contrast these with the beautifully emotive style of playing on Vangelis's Blade Runner soundtrack or Wendy Carlos's soundtrack to A Clockwork Orange.