Complex sentence: The word "panchayat" literally means "assembly" ("ayat ") of five ("panch") wise and respected elders chosen and accepted by the local community.
Split into simpler sentences: The word "raj" means "rule" and "panchayat" means "assembly" ("ayat ") of five ("panch"). Traditionally panchayats consisted of wise and respected elders chosen and accepted by the local community.