An application of ArcGIS for Desktop that is used to create, edit and manage models within its Geoprocessing Framework
ModelBuilder is an application of ArcGIS for Desktop and ArcGIS Pro that is used to create, edit, and manage models.
Models are workflows that string together sequences of geoprocessing tools, feeding the output of one tool into another tool as input.
ModelBuilder can also be thought of as a visual programming language for building workflows.
Reference: ArcGIS 10.2 for Desktop Help