A luncheon is lunch, but more formal. You might be served watercress sandwiches and fruit salad at a book club luncheon, while plain old lunch might be burgers and fries at the diner.
The word luncheon makes its first appearance in English in the late 1500s, in phrases like "a luncheon of bread and cheese." Originally it meant "a thick piece, a hunk" — like a big chunk of bread slathered with cheese. The word may have come from the Spanish lonja, "slice." By the early 19th century, luncheon had taken the formal route, and its abbreviated form, lunch, came to mean the more casual version of the midday meal.