Hey, man -
A caucus involves all of your fellow party members in your precinct getting together (Democrat or Republican, although in Iowa at least, you can switch your party registration up until noon the day of the caucuses, I think) who are interested in deciding who your party's candidate is going to be. That meeting is the caucus (Iowa's 'caucus' is actually a bunch of individual caucuses).
The precincts are pretty small, so there are usually only 30-70 people at each individual caucus. When everyone's at the meeting, it begins, and the supporters of each presidential candidate go to separate areas of the room, so people can see how many supporters each candidate has. If more than 15% of the total number of people attending the caucus support any particular candidate, then that candidate gets delegates assigned to him. Delegates are people who volunteer to go to the Democratic Party Convention (in Boston, I think, this year), and vote for whomever they've been told to vote for (by the caucus).
If, in any individual precinct, more than one presidential candidate gets 15%+ of the voters in the room, then each of those candidates gets delegates assigned to him.
The exact number of delegates a candidate gets depends on how large of a proportion of the people in the room support him.
The cool part is that if you're at a caucus, and the candidate has less than 15% of the people at the caucus, then you have no reason to stay on your candidate's side - since he's not going to get any delegates. So, the other candidates try to get you to come over to their side - to switch allegiances, so you can at least get your second-favorite candidate some delegates. Trying to get the people who like another candidate to switch over to your candidate is a big part of the caucus system.
I've read that one of the reasons Dean may have done surprisingly poorly in the Iowa caucuses is that his supporters were unusually bad at getting the fans of other presidential candidates to come over to his side.
Primaries have the same goal as caucuses - to allow a state's party members to figure out who they want the presidential candidate to be - but a primary is just like a standard election. Everyone goes to a polling place, votes for who they want, and the guy with the most votes gets the most delegates.
Stone