Alluvial means 'deposited by water'. The word 'alluvial' is derived from the Latin word 'alluvius', from 'alluere', which means 'to wash against'. When rocks are exposed to the elements they can "weather" breaking down into smaller particles. Gravity, wind and water will cause the particles to move. It is the movement by water that causes alluvial deposits to develop. A stream will pick up particles when it's fast flowing and will deposit particles when its flow rate is slowed down. These deposits are called 'alluvial deposits'.
Gold and gemstones are heavy minerals and, whenever a river's flow rate decreases, these minerals are deposited first. This may be the case behind big rocks, in the inner corner of a meandering river, at the bottom of a waterfall or at a widening point in a river or stream.
Because of the tumbling action that takes place in a stream or river, most alluvial particles are rounded. Alluvial gold often consists of rounded nuggets or gold dust, alluvial gemstone deposits often contain 'pebbled' crystals. These pebbled crystals are the historical basis for the first cabochons.