It's water! Yes, water! With Carbon Dioxide added so it becomes a suspension of H2O-CO2! Wow, it fizzes when you shake it and you can spray your friends!
I bet you think that's all there is too it, right? Not even.
Most of of think of carbonated water (also called Sparkling Water) as a fairly new invention, but it's not -- in fact, it's quite old. Before the modern carbonization techniques of the last 300 years, naturally carbonated water, by the way of mineral springs, has been used for thousands of years by people all over the world. In old legends it was said to be everything that a miracle cure is supposed to be: a cure for boils, leprosy, wind, insanity and even death
Of course, it really didn't do all these things, but it's easy to see why people thought it might -- it really has a magical property to it in that bubbles of "air" appear to, uhm, appear magically in the water with a sorcerous fizzing sound. You can almost picture a and ancient scene with a group gathered around a stone pot of filled with naturally carbonated water and as the "shaman" of the group begins to stir it, it starts to "boil" in a otherworldly fashion.
Of course, we can't forget that the bubbles in beer as well, but that one is obvious.
One of the first "modern" records of the uses of Carbonated Water is a book written in 1772 by Joseph Priestley; it was a volume on the creation and uses of artificially (non-fermentation based) carbonated water. In this he talks about the observation that spoilage could be retarded by the inclusion of CO2 (through fermentation), as well as a potential prevention of scurvy. In Priestly's own words:
Sir John Pringle first observed, that putrefaction was checked by fermantation, and Dr. Macbride discovered that this effect was produced by the fixed air which is generation in the process, and upon that principle recommended the use or wort, as supplying a quantity of fixed air, by fermentation in the stomach in the same manner as it is done by fresh vegetables, for which he, therefor, thought that is would be a substitute; and experience confirmed his conjecture. Dr. Black found that limestone, and all calcateous substances, contain fixed air, and that the presence of it makes them what is called mild, and that the deprivation of it renders them caustic; Dr. Brownrigg farther discovered that Pyrmont, and other mineral waters, which have the same acidulous taste, contain a considerable proportion of this very kind of air, and that upon this their peculiar spirit and virtues depend ... In short, by this method this great antiseptic principle may be administered in a variety of agreeable vehicles.
This is all well and good, but how did carbonated water get from being a treatment for scurvy to a drinks mixer and soft drink additive?
Well, that is generally believed to have happened in 1807 at the behest a certain Philip Syng Physick when he asked his surgeons assistant to prepare a glass of carbonated water with a quantity of flavoring in it to make it more palatable (because pure soda water usually has a slightly bitter taste to it). It turned out to be so good, history took it's course and, well, in the later part of the 1800's companies like Pepsi, Hires and Coca-Cola where producing their own "patented" concoctions based on fizzy water.
The device that is used now-a-days to carbonize water is appropriately called a Carbonator and uses a series of high pressure valves to impregnate filtered water in a matter of a few seconds, usually along with mixing the flavoring syrup into the water as well. This is a fair bit quicker then Priestly's original machine which took a number of hours or the method of using using dry ice which can hours and using Brewers Yeast which can take upward of several weeks.
Carbonated water is the chief product of many companies like Coca-Cola (of course, they technically make it for internal consumption) and Schweppes. Is is also one of the best consumer products, at least from a manufacturers perspective: in a 2-litre bottle of "Pop", you'll have something like 90% carbonated water, which costs the company something close to 15 cents; even with the cost of the syrup and the labour, it's nowhere near the consumers price of $1.49.
Priestly's book can be found at http://dbhs.wvusd.k12.ca.us/Chem-History/Priestley-1772/Priestley-1772-1.html and you can see that his punctuation is actually worse than mine.