Paraphrased from the W3C: http://www.w3.org/Graphics/SVG/Overview.htm8#intro
Scalable Vector Graphics (SVG) is a language for describing two-dimensional graphics in XML. SVG allows for three types of graphic objects: vector graphic shapes (e.g., paths consisting of straight lines and curves), images and text. Graphical objects can be grouped, styled, transformed and composited into previously rendered objects. The feature set includes nested transformations, clipping paths, alpha masks, filter effects, template objects and extensibility.
SVG drawings can be dynamic and interactive. The Document Object Model (DOM) for SVG, which includes the full XML DOM, allows for straightforward and efficient vector graphics animation via scripting. A rich set of event handlers such as onmouseover and onclick can be assigned to any SVG graphical object. Because of its compatibility and leveraging of other Web standards, features like scripting can be done on SVG elements and other XML elements from different namespaces simultaneously within the same Web page.
If a good authoring tool can be realised, SVG looks set to revolutionise the web. This may sound like hyperbole, but SVG really does have that potential. SVG is simply XML, which is just a text file; Anyone with VI and a copy of the SVG spec can make SVG graphics. Now think of the ways in which a text file can be generated and edited. Database queries sir? CGI sir? Ooh, suits you sir! (ahem!) Did I mention that it is scriptable? To catch a glimpse of SVG in action, go the Adobe web site: http://www.adobe.com/svg/ , download the plugin and look through the tutorial.
I just noticed that Scalable and Vector are a bit of an oxymoron, but SVG does roll easily off the tongue.
More SVG hot creamy goodness can be found at xmlhack: http://www.xmlhack.com/list.php?cat=29 and at mozilla.org: http://www.mozilla.org/projects/svg/