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A lead sheet is a form of musical notation that specifies the essential elements of a popular song: the melody, lyrics and harmony. The melody is written in modern Western music notation, the lyric is written as text below the staff and the harmony is specified with chord symbols above the staff.
The lead sheet does not describe the chord voicings, voice leading, bass line or other aspects of the accompaniment. These are specified later by an arranger or improvised by the performers, and are considered aspects of the arrangement or performance of a song, rather than a part of the song itself.
A lead sheet may also specify an instrumental part or theme, if this is considered essential to the song's identity. For example, the opening guitar riff from Deep Purple's "Smoke on the Water" is a part of the song; any performance of the song should include the guitar riff, and any imitation of that guitar riff is an imitation of the song. Thus the riff belongs on the lead sheet.
A lead sheet is often the only form of written music used by a small jazz ensemble. One or more musicians will play the melody while the rest of the group improvises an appropriate accompaniment based on the chord progression given in the chord symbols, followed by an improvised solo also based on the chord progression. Similarly, a sufficiently skilled jazz pianist should be able to accompany a singer and perform a song by her or himself using only a lead sheet.
Lead sheets are also called fake sheets and collections of lead sheets are called "fakebooks".
The melody, lyrics, and harmony define what a song is. In the music industry and entertainment law, a lead sheet is the document used to describe a song for legal purposes. For example, a lead sheet is the form of a song to which copyright is applied--if a songwriter sues someone for copyright violation, the court will compare lead sheets to determine how much of the song has been copied. Or if a song is considered for an Academy Award or a Grammy, the song is submitted for consideration in the form of a lead sheet.