Microsoft Flight Simulator has been kicking around since
1984. It has, at some times in its eventful life, been used as a demonstration for the capabilities of the
IBM PC (and compatibles). In recent years, there has been some competition in the
civil aviation sim field from the
Flight Unlimited and
Fly! series. Conversely, Microsoft have branched into military flight sim territory with
Combat Flight Simulator.
FS has the advantage of a large library of third-party add-ons (such as new planes and scenery) and a dedicated fan base. The flight model is pretty realistic, good enough (so I'm told) for budding aviators to practice on (but no substitute for actual flight time). In my opinion, the graphics are pretty sucky in all versions, but they are not the main point of the exercise.
Gnarl suggested that I mention the story of Flight Sim's involvement in the attack on the World Trade Center. The fact is, there was no involvement. A couple of tabloids in the UK (the Daily Mail, of course) as well as numerous usually more rational news sources reported that the terrorists might have rehearsed using Flight Simulator. (In actual fact, they practiced using real planes, at a Florida aviation school.)
New versions of the game have the WTC towers removed, although there is apparently some fan effort to reinstate them, although I'm not exactly sure why. They're gone, and it's supposed to be a simulator - therefore, they should be removed, for accuracy at least, if not as a gesture of tact.