M4 is a macro processor in the sense that it copies its input to the output expanding macros as it goes. Macros are either builtin or user-defined and can take any number of arguments. Besides just doing macro expansion, M4 has builtin functions for including named files, running UNIX commands, doing integer arithmetic, manipulating text in various ways, recursion, etc. M4 can be used either as a front-end to a compiler or as a macro processor in its own right.
One of the biggest users of M4 is the GNU Autoconf project.