In modern Christianity, we define an idol as "anything we worship other than God." For example, money, television, power, and ourselves are commonly called idols today. When you go back to Bible times—both Old Testament and New—, though, idols were obviously real, carved images. You have the Golden Calf in the Exodus story, various Baals throughout the rest of the OT, and Greek gods in the NT.
So when and why did the definition of idol change? Well, our society changed. In Western society we no longer need gods to explain weather or fertility or the sun because we have scientific understanding of these things. (Of course, we still believe our God put these things into place, but we don't believe that the sun is a god.) We know that the Bible was written to instruct us, though, so we don't want to just toss out all of the passages relating to idolatry. Thus the change in definition, and it's certainly plausible.
But after a Bible Study on Deuteronomy 4 the other night, I'm thinking our new definition might be a little off. After all, the first and second of the Ten Commandments are different: one forbids worship of another god and the second forbids creation of an idol, including of God Himself. Surely television or ourselves, for example, fall under the first commandment; they are gods we worship before the true God. Furthermore, people back in Biblical times also worshiped themselves or power before God. We don't need to mold the second commandment to fit these things—that just makes it redundant with the first.
Let's look at what the Bible says about idols.
The original commandment, in Exodus 20:4-6 says,
"You shall not make for yourself a carved image, or any likeness of anything that is in heaven above, or that is in the earth beneath, or that is in the water under the earth. You shall not bow down to them or serve them, for I the LORD your God am a jealous God, visiting the iniquity of the fathers on the children to the third and the fourth generation of those who hate me, but showing steadfast love to thousands of those who love me and keep my commandments."
Here we see the Lord talking about a physical idol, a "carved image." Indeed aspects of this commandment are redundant with the first: God already prohibited worship of other gods, now He prohibits worship of images of other gods. But that's not all He is prohibiting, as we see in Deuteronomy 4:15-18:
"Therefore watch yourselves very carefully. Since you saw no form on the day that the LORD spoke to you at Horeb out of the midst of the fire, beware lest you act corruptly by making a carved image for yourselves, in the form of any figure, the likeness of male or female, the likeness of any animal that is on the earth, the likeness of any winged bird that flies in the air, the likeness of anything that creeps on the ground, the likeness of any fish that is in the water under the earth."
Here Moses emphasizes that because the Israelites had no visual image of God, they would be tempted to make one up and worship that. So we see the second commandment has two dimensions: one prohibits making an image of a false god, and one prohibits making up an image of the Invisible God.
In the New Testament, most references to idolatry are talking about worshiping physical images, but Ephesians 5:5 stands out as an exception, "For you may be sure of this, that everyone who is sexually immoral or impure, or who is covetous (that is, an idolator), has no inheritance in the kingdom of Christ and God." Colossians 3:5 has a very similar exhortation. These two references tend towards our modern-day, loose definition of idolatry, but note that these two Biblical exceptions are specifically talking about sexual sin.
How is sexual sin idolatry? God gave us sex in marriage partly to represent in the husband and wife the closeness we, the church, will have with Christ in the new earth. (See Revelation 19:6-8.) Sexual sin is thus creating a deficient image of a gift God has given us, just like idolatry creates a deficient image of the True God. (Anyone who has thought about pornography or the like knows that it is all about creating an image that is far from the truth, but that's a topic for another day.)
Now I don't want this to be just a "quarrel about words" (I Timothy 6:4), so how does this apply to us today? I think we should be more aware of the idolatry that occurs in our daily lives, and more aware of the true definition of an idol—some image of God severely lacking when compared to the real thing. A true modern-day idol can be sex, as above; an image of the Virgin Mary given too much sanctity; or even our ceiling, as described by the demon Screwtape in The Screwtape Letters,
The humans do not start from that direct perception of Him which we, unhappily, cannot avoid. They have never known that ghastly luminosity, that stabbing and searing glare which makes the background of permanent pain to our lives. If you look into your patient's mind when he is praying, you will not find that. If you examine the object to which he is attending, you will find that it is a composite object containing many quite ridiculous ingredients. [...] I have known cases where what the patient called his "God" was actually located—up and to the left at the corner of his bedroom ceiling, or inside his own head, or in a crucifix on the wall. But whatever the nature of the composite object, you must keep him praying to it—to the thing that he has made, not to the Person who has made him.
And with that wisdom from C. S. Lewis I shall end. Hope it's been more than just tickling your ears!