A microclimate is an area that experiences climatic conditions that are different to its surrounding area.
A microclimate might refer to the shaded area between two plants, or an area as large as a city.
Microclimates do occur naturally and can also be a human creation.
Within permaculture microclimates are utilised in order to cultivate plants or raise animals that might not normally be suited to a particular area.

Example:
A house on a rural property in a cool temperate climate would not normally grow bananas.
But…..
If we have

  _______                             Sun
 /       \ ________
I  House I  green  \     Lake
I        I  house   \   _________    

We would have a greenhouse receiving a double dose of sunlight as it would be reflected up of the lake. The interior of the greenhouse would have climatic conditions quite different from the snowy landscape outside. A microclimate has been created suitable to grow a banana plant.