Crema is a mixture of emulsified fat from the coffee beans and very hot water under pressure. It ideally appears as a surface layer of (ideally) reddish brown cream and it contributes significantly to the flavor and aroma of an espresso. Crema is what makes espresso an emulsion, as it consists of liquids, solids, and gases - with flavor compounds embedded in each.
Crema is one of the primary characteristics that distinguish an espresso from regular drip coffee. And while a great crema isn't necessarily a true indicator of a great espresso, a poor crema, or the absence of any crema, is invariably a sign of a poor espresso.
The crema should be reddish brown (not pale), velvety, plentiful (at least 2mm thick), rich, aromatic, and persistent - lasting many minutes before it starts to dissipate. It should leave a dark brown film that sticks to the sides of the cup.
You can also read a lot into the makeup of an espresso from its crema. For example, crema is extremely sensitive to coffee freshness. It will start to show signs of reduced richness in coffee beans roasted as little as one week prior to brewing.
A light or pale crema indicates an espresso that is either under-extracted, made with coffee ground too coarsely, brewed at too low a temperature, or brewed for too short a time. The result of these missteps is often a sour taste.
The forensic evidence doesn't stop there. A dark crema with a hole in the middle indicates the use of too much coffee grounds or coffee ground too finely. A crema that looks like white froth with large bubbles indicates that the brewing temperature was probably too high. If the crema has a large, white spot at its center, the coffee grounds were likely exposed to the hot water for too long. Each of these missteps has their own adverse effects on the espresso's flavor.