For perfectly sinusoidal waveform, power factor is the ratio between the real or active power (Watts) to the apparent power (VA). Others defined it as the cosine of the angle between the real and apparent power (phi). However, when we consider harmonics you need to multiply the cos phi by the cosine of the distortion angle.
You can also search the web for a more detailed explanation.
Second, power factor correction is done to maximize existing equipment capacity. A lagging or leading PF can cause unwanted losses. It is like when you improve your PF, you also make your system more efficient.
There is reasonable background and motivation of power factor control in a paper I wrote about a particular PFC technique. See http://www.embedinc.com/pfc
