Arduino is an open-source platform used for building electronics projects. Arduino consists of both a physical programmable circuit board (often referred to as a microcontroller) and a piece of software, or IDE (Integrated Development Environment) that runs on your computer, used to write and upload computer code to the physical board.
The Arduino platform has become quite popular with people just starting out with electronics, and for good reason. Unlike most previous programmable circuit boards, the Arduino does not need a separate piece of hardware (called a programmer) in order to load new code onto the board -- you can simply use a USB cable. Additionally, the Arduino IDE uses a simplified version of C++, making it easier to learn to program. Finally, Arduino provides a standard form factor that breaks out the functions of the micro-controller into a more accessible package.
What does it do?
The Arduino hardware and software was designed for artists, designers, hobbyists, hackers, newbies, and anyone interested in creating interactive objects or environments. Arduino can interact with buttons, LEDs, motors, speakers, GPS units, cameras, the internet, and even your smart-phone or your TV! This flexibility combined with the fact that the Arduino software is free, the hardware boards are pretty cheap, and both the software and hardware are easy to learn has led to a large community of users who have contributed code and released instructions for a huge variety of Arduino-based projects.