Port Trunking refers to individual ports programmed to allow traffic from all VLANs to pass through. Trunk ports are used when connecting multiple switches in a network that runs multiple VLANs.
You can read more on the topic if you visit our VLAN section under the NETWORKING--->Virtual Local Area Networking menu. The topic is heavily covered with over 50 eye candy diagrams for you
Link Aggregation is as you correctly noted, a description of linking multiple links together to achieve greater bandwidth.
However, in order to be correct with our terms, it's actually called 'Fast EtherChannel' for Fast ethernet links, or Gigabit EtherChannel' in the case of gigabit links.
These links will aggregate the bandwidth between them, giving a whopping superfast link towards the device they are connected to - usually a mainframe or central server where everyone connects to.
In the case of a link failure, as you again correctly noted, the overall bandwidth is simply reduced.
What we should though note here is that the above Fast EtherChannel & Gigabit EtherChannel' links use special protocols in order to coordinate the transfer of data between the end points (the switch and device they connect to).
The protocols that make this possible are mainly two:
1) Port aggregation protocol (PAgP) which naturally is a Cisco proprietary protocol, so you'll only find it on Cisco switches :wink:
2) Link Aggregation Control Protocol (LACP) which is part of an IEEE specification (802.3ad). This is the protocol all other vendor switches will use to achieve the same result.
Of course, a Cisco switch is able to support both protocols. In practice you will find differences between the two protocols, but that's a different story which we won't get into at the moment.