In this article I'll tell you how to set up hidden crypto-container using regular means of Linux OS (LUKS and cryptsetup). Standard features of LUKS (such as using external headers and placing actual data by predefined offset) allow user to access hidden data within existing container and deny existence of such data.
UPD[31/05/2014]: This post was ready more than a month ago, and those days I could not even imagine such strange sudden death of TrueCrypt. Well, maybe this project isn't completely dead, let's see… Nevertheless in the following text I leave references to TrueCrypt as is.
You can find very long and detailed definition of this term in Wikipedia: http://en.wikipedia.org/wiki/Plausible_deniability. In short it means that you can do or have something and nobody can suspect and prove that (if you don't admit it, of course). And then you can deny having or doing that thing, if someone want to accuse you, because (let's repeat it) nobody can prove it. E.g., if a kid kicks his little brother's ass while nobody see and the brother goes for seeking justice to their parents, then what happens?