Online machine learning is used in the case where the data becomes available in a sequential fashion, in order to determine a mapping from the dataset to the corresponding labels. The key difference between online learning and batch learning (or "offline" learning) techniques, is that in online learning the mapping is updated after the arrival of every new datapoint in a scalable fashion, whereas batch techniques are used when one has access to the entire training dataset at once. Online learning could be used in the case of a process occurring in time, for example the value of a stock given its history and other external factors, in which case the mapping updates as time goes on and we get more and more samples.
Ideally in online learning, the memory needed to store the function remains constant even with added datapoints, since the solution computed at one step is updated when a new datapoint becomes available, after which that datapoint can then be discarded. For many formulations, for example nonlinear kernel methods, true online learning is not possible, though a form of hybrid online learning with recursive algorithms can be used. In this case, the space requirements are no longer guaranteed to be constant since it requires storing all previous datapoints, but the solution may take less time to compute with the addition of a new datapoint, as compared to batch learning techniques.
As in all machine learning problems, the goal of the algorithm is to minimize some performance criteria using a loss function. For example, with stock market prediction the algorithm may attempt to minimize the mean squared errorbetween the predicted and true value of a stock. Another popular performance criterion is to minimize the number of mistakes when dealing with classification problems. In addition to applications of a sequential nature, online learning algorithms are also relevant in applications with huge amounts of data such that traditional learning approaches that use the entire data set in aggregate are computationally infeasible.
see more: https://en.wikipedia.org/wiki/Online_machine_learning