CAOS, commonly believed to be an abbreviation for Creatures Agent/Object Scripting, is a scripting language used in many games by Creature Labs - most notably the Creatures series of games.
It is an event-based language, with commands/operators consisting of four-letter identifiers. The events are numbered, and an event handler is identified by a three-number agent identifier (consisting of a genus, a species and a family) and an event number.
The versions of the language used in Creatures, Creatures 2 and the Creatures Evolution Engine (used in more recent games) are vastly different from each other, but the principles remain the same.
This scripting language is probably the main reason why the Creatures series has been extended so much by third-party agents.
In Creatures and Creatures 2, this scripting was normally contained inside COB files along with other details needed by an agent. Players injected these COB files using an Agent Injector. In newer games, the injectors themselves are typically in-game agents, and the agents are stored in PRAY files (bundled with other files) or COS files (if only the scripting is required).
The scripting language makes heavy use of the concept of a target, which is a special variable which most commands act on by default. Another commonly-used variable is the owner variable, which points to the agent the script is currently acting on.
Some example CAOS commands are:
outs "text string here" (this sends the specified text to the CAOS output)
targ hots (a Creatures 3 command, this sets the current target to the item the 'hand' (the Creatures pointer) is hovering over)
kill targ (this destroys the agent which is currently targeted)