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A polycule is a romantic network composed of people who are closely connected. It is made up of a polyamorous person's lovers and partners. It can be as large as a dozen or more people, or as small as five or six, depending on the extent of the network and the number of partners one has.
A polycule is another term for the "extended family" of a polyamorous person. For example, if a person has three partners, and two of these partners have another partner, the polycule is made up of six people, counting the original person.
The term "polycule" is reserved for those who have close relationships with one another. Often, lovers of lovers' lovers do not enter your particular polycule. It is considered more of a close-knit family/community because you often need to communicate with your partners' other partners for time management, emotional issues, etc.
Some polycules (or parts of polycules) live with each other in shared arrangements. It saves money, makes time management easier, and strengthens family bonds.