Adaptive difficulty is the process of adjusting the game in reaction to the player. By spawning new enemies or powering up existing enemies if the player is progressing quickly through the game, or by decreasing the frequency and/or difficulty of existing enemies if the player appears to be having problems progressing, adaptive difficulty techniques attempt to create the 'optimal' game experience.
Classically, adaptive difficulty has been seen as a hard problem, requiring a level of artificial intelligence in the game to attempt to model the player to attempt to determine if they are finding the game easy or difficult.
However simpler RPG style mechanisms can also be seen as adaptive difficulty techniques. Allowing the player to level up by playing through additional easier content can ensure the player is able to grind their way through parts of the game in order to decrease the difficulty of sections of the game where the difficulty level increases. Paradoxically, adaptive difficulty techniques which increase the difficulty of the game by scaling up enemy strength have been fiercely resisted by RPG players, as can be seen by the negative reactions to the difficulty scaling in Oblivion.
Adaptive difficulty is not usually seen as a procedural content generation technique, but it has most of the features of such techniques. It could be seen as decreasing a game's randomness instead of increasing it which would make games which feature it without other PCG features to fall outside the 'canon' of PCG games.
PCG Wiki References
Flow in Games: An Interactive Thesis on Dynamic Difficulty - article on the use of adaptive difficulty in Flow.
Adaptive Difficulty - article discussing adaptive difficulty in RPGs.
Procedural Storytelling 2: Adaptive Difficulty - article discussing adaptive difficulty in games.
Gabe Newell writes for the Edge - Gabe Newell describes adaptive difficulty in Left4Dead.