The rundown:
What is it?
OpenID lets you log into (or even register with) other websites that supports openID by just using an openID URL (eg. https://me.yahoo.com/plumonday) instead of a username and password. This does away with the need for having a seperate identity (username and password) for each website that requires you to register with them. Websites supporting OpenID will usually have a link to a openid login page below their normal username/password login page. You get an openID URL by registering with an OpenID Provider such as yahoo or myopenid.
With openID, a website (the relying party or "consumer") delegates the task of authentication to your OpenID Provider (the website that you have an openID with). You can even register with a website you don't have an account with since the openID Provider gives them the registration information that website needs, such as address, e-mail or full name.
Example OpenID Providers:
yahoo
myopenid
livejournal
References:
The official OpenID website
Specs on OpenID version 2.0: Good for definitions
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