they are an imaginary digital currency that is secured by group verification of transactions. the only thing you need to trade bitcoins is a bitcoin wallet, which is basically an encrypted archive that keeps your bitcoin keys. you can trade them for pretty much anything that people are willing to accept them for.
the beauty of it is all transactions are anonymous.
the weakness of it is there is no actual value, just perceived value. It has been tried before and people have lost huge swags of money, though never as successfully. it is a VERY volatile currency and you should not put your life savings in it.