The iSight is a small cylindrical FireWire webcam produced by Apple Computer. Its primary purpose is to function "as the eyes and ears of iChat," the company's AOL Instant Messenger clone, which in the most recent version added full-motion video chat in addition to the superb streaming audio.
The camera features a 1/4 inch CCD sensor capable of producing images at resolutions as high as 640x480. The high bandwidth of FireWire enables it to transmit full motion video at 30 frames per second. It also includes a dual-element microphone with active noise reduction so that the person talking isn't drowned out by the noise around them. It is powered completely via FireWire, making it very portable as it can simply be plugged into an iBook or Powerbook operating on battery power and be used normally.
The iSight is a prime example of an effective use of Steve Jobs' amazing Reality Distortion Field. Apple is famous for creating a product and worrying about demand later. It is unlikely that the iSight would have lasted for more than a month if Steve Jobs hadn't introduced it onstage by having a video chat session with Al Gore, and then later with Bono of U2. Jobs' stage presence can make Mac users feel an undying need for even the most trivial product, especially after Apple's product design department puts it in a nice brushed metal perforated package (a new trend started with the G5 Case) .
UPDATE: In January 2004, Apple released iMovie 4.0, which added recording functionality to the iSight. You can now capture video with it just like a regular DV camera, and then use iMovie's editing features to refine and publish it. Just one more use for everyone's (ok, more like five people, but who's counting?) favorite gadget.
More information available at the official site: http://www.apple.com/isight/