Linux usually refers to a Unix-like operating system, using the Linux kernel developed by Linus Torvalds in 1991. It's a very stable and secure operating system, and it's popularity is growing exponentially.
Linux is found in anything from a laptop or desktop PC, right through to servers that form the backbone of the internet. Embedded versions of Linux can be found in mobile phones, MP3 players, games consoles etc.
It can be controlled by a graphical environment (similar to a Windows or Mac desktop), or via the command line interface. There is a growing list of applications that run on Linux, most of which are totally free to install.
There are many variations of the Linux operating system (or distributions). Some are themed towards music or graphics, others are more mainstream. Some can be run from directly a CD, requiring no installation. These "Live CD's" allow you to get the feeling for a particular Linux distribution before actually installing it on your hardware.
Some of the more popular Linux distributions are listed below in alphabetical order. Many others are available.
Damn Small Linux (50Mb Live CD or boot from USB pen / HDD etc) http://www.damnsmalllinux.org/
Dyne:bolic (Live CD) http://www.dynebolic.org/
Knoppix (live CD / DVD) http://www.knopper.net/knoppix/index-en.html
Linspire (formerly Lindows) http://www.linspire.com/
The list above was correct at December 2008. If you find any dead links, please report them using the form on the Contact Us page.
There are versions of the Linux operating system that run on Apple's PowerPC hardware, however most of the distributions above are intended for Intel or AMD based PC processors.