Bollywood is an informal term
popularly used for the Hindi-language film industry based in Mumbai (formerly known as Bombay), Maharashtra, India.

Bollywood is often incorrectly used to refer to the whole of Indian cinema; however, it is only a part of the total Indian film industry, which includes other production centres producing films in multiple languages.
The largest film producer in India and one of the largest centres of film production in the world.

The name "Bollywood" is derived from Bombay (the former name for Mumbai) and Hollywood, the center of the American film industry. However, unlike Hollywood, Bollywood does not exist as a physical place.

Source: Encyclopedia