Diegetic and Non-Diegetic Sounds

Diegetic Sound

Sound whose source is visible on the screen or whose source is implied to be present by the action of the film:

• voices of characters 
• sounds made by objects in the story 
• music represented as coming from instruments in the story space

Diegetic sound is any sound presented as originated from source within the film's world. 

Digetic sound can be either on screen or off screen depending on whatever its source is within the frame or outside the frame.

Non-diegetic Sound

Sound whose source is neither visible on the screen or has been implied to be present in the action: 

• narrator's commentary
• sound effects which is added for the dramatic effect
• mood music

Non-diegetic sound is represented as coming from the a source outside story space. 

The distinction between diegetic or non-diegetic sound depends on our understanding of the conventions of film viewing and listening. We know of that certain sounds are represented as coming from the story world, while others are represented as coming from outside the space of the story events. A play with diegetic and non-diegetic conventions can be used to create ambiguity (horror), or to surprise the audience (comedy).

Here is a clip of the Warm Bodies.  In here, the sound of the characters speaking is diegetic sound. The mood music and the narration of R is the non-diegetic sound.