A cross-breed creature is one which is made up of several other breeds, i.e. not a pure-breed. A cross-breed can be a Norn, Grendel, Ettin, Geat or even a mixture of species. Such a creature can occur through natural breeding or mutation, or via the use of selective breeding or genetic engineering.
Cross-breeding is therefore where you breed creatures of different type, for example a Magma Norn and a Treehugger Norn to produce cross-breed offspring.