The simplest form of castle construction. The motte and bailey consisted of a defensive ditch encircling a wooden wall (the palisade), which itself encircled a raised earthen mound on which stood a wooden or stone tower (the keep). The yard within the wall (the bailey) could contain livestock (to provide food) and outbuildings to provide supportive functions (such as a forge, stables, and storage).
The outer wooden wall may have been plastered and painted to give the fortification some color and to fill any holes in the outer wall. The palisade was topped with crenellated paling that provided archers with positions of (relative) safety from which they could fire out. The defensive ditch could include more complex earthworks, or be lined with wooden spikes to discourage closer inspection by would be attackers.
The inner keep was the heart of the castle, and was the location of the residence of the castle's master, as well as the last line of defense in the event on a siege. The tower of the keep were built higher and stronger, to attempt to provide a greater advantage to the castle's defenders.
The motte and bailey castle was a very early form of castle, and is found primarily during the early Middle Ages. It is thought that it may have been baced on earlier earthworks-only fortifications built as far back as the Iron Ages. The motte and bailey style of construction is thought to have originated in France, where much of European castle building is thought to have its origins; French castle and siege engineers were dominant on the scene at the time.
Most castle constructions begun between 10660 and 1150 began with motte and bailey castles, and later expanded and upgraded their defenses. Presently existing examples have often been heavily modified and rebuilt, with the wooden facade being replaced with more durable stone. Excavations of unmodified motte and bailey castles have given historians a better idea of what they were like at the time of their construction. William the Conqueror is known to have built several motte and bailey castles, both before and after his conquest of England.
Ultimately, the motte and bailey castle fell from favor. No matter how it was defended, it remained very vulnerable to fire, which made it indefensible against a sufficiently determined opponent. The motte and bailey castle eventually gave way to more durable castles built with stone and cemented with lime mortar, which were better able to resist fire and other assaults. However, the defensive principles of the motte and bailey- defense in depth- was carried forward to newer constructions, ensuring that the ideas of the motte and bailey castle would be carried on for generations to come.
Thanks to wertperch for some additional information, and The History Channel for much of the rest.