Half-Blood is the word used to describe witches and wizards that have both magical and non-magical ancestry. Some wizards believe in pure-blood supremacy and look down on those who are of mixed ancestry. However, half-blood is the most common blood status of the magical community; witches and wizards would have died out if they had not married and had children with Muggles.
Having both magical and Muggle parents does not dilute magical ability; magic is innate and can manifest in anyone. Harry Potter is a half-blood. His father James Potter comes from an old wizarding family and his mother Lily Evans was Muggle-born.