People hide little caches and using a GPS device put the location of the site on the Geocaching website. People all over the world have hidden caches. People then put the co-ordinates from the site into their GPSs and the challenge is to find the cache, exchange the little trinkets often found within, and sign the log book.
More details about Geocaching can be found on the main Geocaching web site: http://www.geocaching.com/faq/
Whilst on holiday in Argeles France (near Perpignan) August 2004 I set up my own geocache. Since then it's been visited by over 16 different people. The details of my cache can be found following this link (Cache ID GCKCJC ).
Below are photos from my cache taken in August 2005, a year after it was first hidden. I went back to check on it and read the log entries. The photos show the cache's location (both hidden and revealed and the pages from the log.