Whats an SSD?
SSD stands for Solid State Drive.
It basically is a hard drive that utilizes the same Flash technology you find on USB pen drives to make a bigger, greater capacity version. It stores the information on electrical chips, instead of big magnetic platters. The advantages are:
Faster (electricity is faster than a read/write head moving along a CD like thing)
More reliable (no moving parts means less can go wrong)
Sturdier (again, no moving parts, so moving/banging it accidentally won't do much)
Smaller
Thus, they are expensive. That's why people use them to install their OS and programs for fast booting/running, but since they are so expensive, they get a bigger, standard hard drive for all their data.
Some external hard drives also use this technology, typically smaller ones, and ones that don't need separate power cords in conjunction to the USB cords.
There are numerous applications for this technology:
You can use it as a boot drive, installing OS and programs, then everything else on a bigger, slower, cheaper standard hard drive. The advantage of this is you get 8 or so second boots into Windows 7, and all your programs launch about 5 or so times faster, sometimes even faster than that. The disadvantage is that your data is still slow, and once it's full, it's full. All the rest has to be installed on the standard hard drive.
You can use it as a SRT drive (only if you have Z68 or later Intel chipsets on your motherboard). This means that you use the SSD as well as a standard hard drive, however the SSD is used as a caching device for the HDD. This pretty much speeds up the entire capacity of the HDD to speeds of the SSD, or if not full speed, close enough. So say you want to copy some files with your hard drives set up like this. Your SSD is invisible in your "My Computer" box, and only your big hard drive is there. You copy them on to the big hard drive, and they go on to the SSD instead, therefore copying super super fast. The SSD then holds on to them, and copies them to your big hard drive in the background. This is the slow part of the process, but since they have already copied to the SSD, and therefore in to the cache, to you they are already copied and this part doesn't affect you, and you can carry on with your work. That's what a SSD, HDD and Intel SRT technology can do, lol. Bit complicated, hopefully you understand.
EDIT: This also means that you can add extra HDDs later on to increase your storage space without losing data or affecting anything.