Avatar is a modern Hindi word from the SAN-SKRIT word avatara, which means “one who has descended to the earthly realm.” The word in both its Sanskrit and its Hindi forms is used in VAISHNAVISM to refer to the incarnations of Vishnu, which usually number 10. Technically, Shiva never becomes an avatar. In recent times, the word avatar has come to be used for any enlightened teacher. It is, in effect, an honorific bestowed upon the teacher by his or her disciples or the larger community. One such example is Avatar ADI DA SAMRAJ.
Further reading: Antonio T. de Nicolas, Avatar, the Humanization of Philosophy through the Bhagavad Gita (New York: N. Hays, 1976).
Encyclopedia of Hinduism. A. Jones and James D. Ryan. 2007.