You have probably heard the word "Arduino" before, but you might not know what it means. The simple answer is that an Arduino is a small circuit board that costs about $20 - $30 and can be used to add interactivity to projects.
Say for instance, you'd like to create a gadget that warns you when your car gets too close to the back wall when you are driving it into the garage. You can attach a $10 proximity sensor, a $1 buzzer, and a $.01 LED to the Arduino and mount it to the back wall of the garage. Next, write a small program that tells the buzzer and LED to activate when the sensor detects that the car is getting too close to the wall.
Arduinos are easy to program -- in fact they were made for artists and designers, not engineers (although plenty of engineers use and love Arduino).
In this short video MAKE magazine's Matt Richardson provides an excellent introduction to the Arduino and shows a number of cool things you can do with it.