Most shots from the fairway with an iron will scrape off the top of the turf where the ball was resting. "Divot" refers to both the turf that is scraped up, and the scarred area in the fairway where the turf had been. A good divot will start just in front of where the ball was at rest - meaning that your club struck the ball first, then the ground. If the divot starts behind the ball, you have mis-hit the shot (this type of mis-hit is often called hitting the ball "heavy" or "fat
If you create a divot with your shot, it is always appropriate to repair it (see How to Repair Divots).
A "nice divot" is a divot that is sheared off very cleanly and thinly and remains in one piece. To create a divot is called "taking a divot."
Taking a divot is appropriate with iron shots, but if you take a divot with a wood you've probably mis-hit the golf ball.
Rules FAQ: Am I allowed free relief if my ball rolls into a divot hole in the fairway?
Tip: How to hit out of a divot
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Common Misspellings: Divit, divitt, divott
"Pick up your divot and replace it."