A peptide is any of a class of organic molecules that are composed of (and hydrolyze into) amino acids and form the basic building blocks of proteins.
These molecules link to each other by forming a bond (an amide linkage) between the amino group of one peptide to the carboxyl group of another. Peptide bonds create double-bonds between the oxygen of the carboxyl group and the carbon of the amino group; as a result, they are unusually stiff and do not let the molecules turn on the bond axis as other molecular bonds do.
The bonds between peptides can be broken by enzymes known as peptidases.
Peptides are classed according to how many amino acids they are composed of. A dipeptide contains two amino acids, a tripeptide contains three amino acids, and so on.
Biochemists study the structure of peptides to help solve a wide range of problems in cell biology. Peptides can act as systemic regulators and as substances for signalling between cells. For instance, peptides called enkephalins are natural opiates created by the brain. The peptides oxytocin and vasopressin, which are both produced by the pituitary gland, act as hormones.
In many metabolic disorders, the body may inadvertently produce toxic peptides that it cannot break down which build up in the system and damage organs. Thus, being able to detect and identify these poisonous peptides is crucial in diagnosing and treating these disorders.
Peptides can also be an important cell biology research tool; several types of marker peptides can be created by linking a small peptide to a dye molecule. These markers can be used to track other molecules, cells and physiological processes.
Other peptides are studied because they have or may have value in treating diseases such as cancer, AIDS, and other viral and bacterial diseases. The antibiotics cyclosporin, valinomycin, and gramicidin are all cyclic peptides. A peptide chain named humanin has shown some promise in treating Alzheimer's disease by blocking the processes that cause brain cell degeneration in the disease.
And finally, many peptides have other uses in a variety of industries. Aspartame is a peptide that has gained fame as an artificial sweetener.
Some of the information in this writeup was gleaned from http://www2.swmed.edu/medlabsci/aldrichpdf/biochem/Chapter_3.PDF. Much of the rest was taken from the science dictionary at http://biotech.icmb.utexas.edu/; I oversaw the development of the dictionary (the website was mothballed in 1998) and I believe I wrote the entry this is based on.