What is a pyramid scheme?

Could you please elaborate on what a pyramid scheme is? I've heard the term before but I'm not entirely sure how it works. From what I understand, it seems to be some sort of fraudulent investment opportunity where early investors make money by recruiting new investors, but the scheme eventually collapses as it becomes harder to find new participants. Is that accurate? And if so, how does it differ from legitimate multilevel marketing or referral programs? I'd like to have a clearer understanding of the risks involved in pyramid schemes.