It is income where you make a sale one time and it generates income on a regular basis going forward. Residual income can even be earned on multiple levels. For example if you refer someone to an affiliate program, you make a commission for a percentage of the initial sale. In the future when your customer pays their membership fees for the program each month, you earn a percentage of that as a commission.
With 'multi-level-marketing' you may also receive a percentage of the commissions when your customer makes sales of their own. So the idea is that you have income that continues to generate as a result of that initial sale for as long as your customer remains active in the program. This would also be true if you were directly selling a service, for as long as your customer continues to use the service. Usually if you are selling products directly, these are considered 'one-time-only' commissions, as you earn money only one time when the purchase is made.
Nothing wrong with this but it does take much more work to build and sustain your momentum to keep those one-time sales coming in on a regular basis. It is a good idea to have a combination of sales types and the money all adds up to represent a substantial income. However it does seem like a brighter idea to have residual income - just in the way it is more efficient to plant 'perennials' that bloom every season after they are planted once, than it is to have 'annuals' that you must replant every year.
It's fun that the plant analogy really does work so well when discussing residual income too - because for example when you have a perennial plant it will not only bloom each year in the same place, but the wind will carry the seeds and the plant may pop up in many different places.
With residual income it is the same in that you have contacted the initial customer who then contacts others, who contact others and before you know it you have built an 'organization' just from that one initial action that you took by 'planting the seed'. Internet marketing and in fact marketing in any industry is about generating lots of volume with your efforts. This is because the majority of people will not be interested and will not respond.
It is a bit like the proverbial 'needle in a haystack' in that you must weed through all the people who won't be interested to find the few that will. Actually there are many that will respond over time - but just as a percentage of the human population on earth, only a few (million) are interested in starting a home business or working from home.
Remember as well that it is believed that people do not usually respond to an ad the first time they see it. It is approximately the 5th or 6th time. This is another reason to always keep the volume of your advertising turned up to the max. This week someone may not be interested - but things are always changing and maybe next week they will change their mind and respond to your ad!