A close-fitting dress with a straight, narrow cut. Generally the hemline ranges from skirt length to miniskirt length, and is tailored for a close fit.
The difference between a pencil dress and a tube dress is that a tube dress is always strapless. A pencil dress can have straps or a halterneck, and is applicable to all non-strapless dresses with a tight-fitting lower half.
Hestia's white dress is an example of a pencil dress, due to the skirt portion of her dress fitting tightly around/below her hips.