Basically node.js is another back-end or server-side technology (sort of like using Ruby or Python and not very much like PHP - but you get the general location) and it's used to create web applications.
The basic idea is that it uses server-side JavaScript on a V8 JavaScript engine (open source tech designed by google and built into the google chrome web browser - but setup as a server) running on Unix-like platforms.
It is an event-driven input/output framework which means it's suited to applications that run off events such as online user interactions.
The main benefits are that it has fast performance and can scale to support a larger number of users/events on the same hardware as current web server systems.
There is also the benefit of interacting with the web page DOM using the same JavaScript code as client-side programming, and as it's all JavaScript it has less of a learning curve.
As mentioned on the Node.js site "..less-than-expert programmers are able to develop fast systems."
If you're a Developer and what to know more then the following resources are a great start:
nodejs.org
nodeguide.com/beginner.html
www.stoimen.com/blog/2010/11/16/diving-into-node-js-introduction-and-installation/
howtonode.org/hello-node
mrjaba.posterous.com/a-gentle-introduction-to-nodejs
or check out these slides from a presentation of a beginners guide to Node.js
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