This is a wonderful question, because it has taken me many years to decipher it myself and probably has a different meaning for everyone.  Organizations are attempting to make work more comfortable; yet, they are creating more confusion in the process.  it is important to assess organizational culture in making this decision.  Some organizations consider khakis business casual, and others do not. 

Regardless, it is never jeans, t-shirts, sandals, tennis shoes, or short skirts.  And always, keep your clothes clean and pressed along with your shoes polished.  Also, solid colors are a safe bet.  Here is a simple list of guidelines for you.  

Women: skirts (knee length or longer), slacks, button down shirts or blouses, sweaters, dressy shoes (not crocs or tennis shoes) with low or flat heels, blazer or vest, makeup to a minimum, and conservative accessories.

Men: slacks, button down shirts, sweaters, tie (if in doubt), business or sport jacket, and dressy shoes along with matching socks (brown or black, not white please).  Is it just me, or does it sound a lot easier for men?!

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