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Hearsay evidence relates to statements made by a witness, which are based on what another person has told them and not on the witness' own observations or their own knowledge. Generally, hearsay evidence is inadmissible in most courts or hearings but some exceptions are made (e.g. administrative hearings).
Hearsay evidence is inadmissible under the Federation judicial system but it is admissible under Tanugan law, if it comes from someone who is deceased. Chief Investigator Krag noted this in 2366 when Jean-Luc Picard, who was holding an extradition hearing, initially objected to Krag's request to present hearsay testimony. (TNG: "A Matter of Perspective")