As stated on the Yocto home site:
The Yocto Project is an open source collaboration project that provides templates, tools and methods to help you create custom Linux-based systems for embedded products regardless of the hardware architecture.
The Yocto Project is more than a distribution. It's intended to be a workgroup having the goal to produce tools and processes that will enable the creation of Linux distributions for embedded devices that are independent of the underlying architecture. The Yocto Project was announced by the Linux Foundation in 2010, and in the upcoming years, it aligned itself with OpenEmbedded, an existing framework with similar goals, with the result being The OpenEmbedded-Core Project.
Yocto's main components are ...