I've read about this about a year ago and thought it cool. I read about it again last week and decided to check it out some more. I'm glad I did.
Geocaching is a hobby that is practiced all around the world. The actual definition isn't really nailed down and it tends to change on occation, but essentailly it works like this:
1) You get a pair of Latitude and Longitude coordinates from someone
2) You use a handheld GPS to find your way to those coodinates
3) You search around the spot to find a cache which generally contains a log and some small items people have left there.
4) You note your visit in the log
5) You leave an item of your own
6) You collect one of the items in the cache
7) repeat, leaving the item from (6) in the next cache you find
This has been made all the more easy with the wonderful homepage/website for the hobby. Once you log in, you can search for all the caches in your area (or the world). You can keep track of them on your own personalized page and you can add comments to the cache pages when you fin (or don't find) them.
Like I said, it is constantly changing and now the site keeps track of caches that aren't fully caches, some are just logs and some are locations that you need to find. In all, it's a ton of fun.
I know this becasue I went out today on my lunchbreak to find one that was supposivly 2 blocks from my house here in the city. I took my GPS and walked to the coordinates and was rewarded with... nothing. I coudn't find the cache.. This wasn't going to be that easy.. Sure enough after about 15-20 minutes I figured out two important things: 1) altitude is relevant so even though you are in the correct place, the cache could be above or below you, 2) GPS resolution is only about 50 feet so even if you think you are at the location, you may be a tiny bit off.
Finally I determined the location and was sure the cache was nearby. I looked all over and was about to give up and then I saw something interesting. I looked over and saw where the cache was.. clever.. I ran to it and looked inside and sure enough, there was the cache.. it was super tiny!
I opened it up and unrolled the log, there were names from all over the place (farthest I saw was New Zealand). How cool that others had been in this same spot, probably looking for this very item like I was! I put my name in the log, snapped a photo with my phone camera and headed home.. All told 30 minutes.
Since I live in Philadelphia, there are a ton of caches to locate, I will find them all. I also plan on creating a couple of them.. I've got some great ideas.
In either case, I emplore all of you to check out this sport/hobby and give it a try. I bet you will have a great time!