A Balaclava is a form of head-gear, best envisioned as a regular woolly winter hat, but longer so it can be pulled down over the face, and with holes in it for the eyes.
It has different names around the world, being known as a "finnlandshette" (Finnish hood) in Norwegian, "Elefant hue" (Elephant hood or cap) in Danish, a ski mask in the US, and a Balaclava in the UK. Know another language? /msg me!
The latter name originates from the Crimean war. Balaclava is a region in the city of Sevastopol in the Crimea of southern Ukraine. In the winter of 1854, knitted hoods that covered the whole face against the biting cold were sent over to British troops fighting in the Crimean war.
A few different types of balaclavas are available. Varieties include versions with a separate hole for each eye, an oval hole for both eyes, and with or without a hole for the mouth. Most balaclavas can be rolled up and worn as a normal woolly hat, normally hiding the holes altogether, making it impossible to differentiate from a regular item of winter headgear.
Whilst traditionally being made from knitted wool, modern versions can be made from any number of materials, including silk, wool, cotton, or fleece. There have even been versions that can be worn together with a gas mask, usually out of a neoprene compound material with activated carbon lining between the layers of neoprene. Racing drivers and test pilot fighter pilots will often have a type of balaclava made of fire-retardant material in case of accidents.
Balaclavas are effective at keeping the wearer warm in extreme cold, and is often used in winter sports where wind-chill is an issue - skiing, polar expeditions etc.
Due to its covering-most-of-the-face characteristic, Balaclavas have further become a means of disguise. A favourite to terrorists, bank-robbers and other lowlife around the world, the menacing looks of the balaclava is enough to instil fear in a large portion of the population - especially the portion that grew up around the IRA, who made the balaclava a symbol of their reign of terror. In fact, in the UK, the one-holed balaclava (with an oval hole for the eyes, none for the mouth, and normally in an army-green colour) is known as an IRA balaclava.
Other, legitimate agencies such as the British SAS forces, or riot police, occasionally use balaclavas where there is fear of retribution against their homes or families when they are involved in special operations.
Finally, it's worth noticing that in many countries, it's illegal to wear balaclavas when you are in crowds of people, such as in a demonstration or similar.
As a special bonus / easter egg: Me wearing a balaclava: http://kamps.org/g/?qtqa