Bitcoin is a short word for a long, complex, computer process which generates digital money, also called cryptocurrency.
For a basic explanation of how it works, this is a good video.
For those who want to get down to the nitty-gritty of Bitcoin, the following terms will help you make your way through the process.
Knowing the terminology will also make for an easier read of an in-depth article on Bitcoin, written by Benjamin Wallace in 2011 for Wired magazine. The article contains a detailed history of Bitcoin and its process.
For a graphic history of Bitcoin, go here.