It is a cheap computer. With a monitor, keyboard and mouse you are set. The OS runs on a SD card. It has general purpose GPIO inputs and outputs hence it is easy to boot a linux OS of your choice and use the GPIO pins to control or measure things. The applications are education, home automation, thin client, media center, NAS, VPN, firewall, … . A worldwide community for answering questions and a lot of people posting their projects on the web so you can reuse what they did. Did i mention that it is cheap?
What are some characteristics of a Raspberry Pi?