The Collaborative International Dictionary of English v.0.48:

Exaggeration \Ex*ag`ger*a"tion\, n. [L. exaggeratio : cf. F.
   exag['e]ration.]
   1. The act of heaping or piling up. [Obs.] "Exaggeration of
      sand." --Sir M. Hale.
      [1913 Webster]

   2. The act of exaggerating; the act of doing or representing
      in an excessive manner; a going beyond the bounds of truth
      reason, or justice; a hyperbolical representation;
      hyperbole; overstatement.
      [1913 Webster]

            No need of an exaggeration of what they saw. --I.
                                                  Taylor.
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   3. (Paint.) A representation of things beyond natural life,
      in expression, beauty, power, vigor.
      [1913 Webster]

WordNet (r) 3.0 (2006):

exaggeration
    n 1: extravagant exaggeration [syn: hyperbole, exaggeration]
    2: the act of making something more noticeable than usual; "the
       dance involved a deliberate exaggeration of his awkwardness"
    3: making to seem more important than it really is [syn:
       exaggeration, overstatement, magnification] [ant:
       understatement]