This is not the place to attempt to answer that question fully as there are many other sites dedicated to just that.
Linux is a 32 bit multi-user multi-tasking operating system. The heart of Linux was created by Linus Torvalds but it is now developed by many (thousands???) of programmers the world over. It is released free (yes free!) and can be downloaded from the internet, however it is easier to purchase a Linux distribution on CD to save on phone-bills and stress!!! For more information on Linux visit www.linux.org.
I currently use the Slackware 8.0 flavour of Linux. I would not recommend any beginners to choose this version as set-up of slack requires a bit of knowledge about the OS that newbies will most likely not have.
There are distributions of Linux that almost set themselves up, making them ideal for the non-involved user. See Corel, SuSE or Debian (to name a couple of distros). These are the ones ideal for people moving from MS windows, or just trying out Linux as an alternative.
As for software, there is no end to what is available for download. If you need it, someone else will have needed it and may have already written it. These applications can be found at sites such as Tucows, CNet and Freshmeat. You can usually find anything you need (if it exists) by doing a search on Google.
Beware of the following gratuitous advert!
If you are in the UK (although it seems to have a world wide audience), the following publication is well worth considering for an introduction to the world of Linux - Linux Format is a monthly magazine published by Future publishing. If you can get a hold of it, it is certainly a worthwhile read plus you quite often get a free distribution on the cover CD.
As before, if you think I need to add anything to this page, email me.