MPEG (Motion Picture Engineering Group) Layer 3 compression format, an audio compression format capable of dramatically reducing the size of audio files with minimal loss in sound quality. It works using lossy compression
which means it throws away redundant information to reduce the file size of the final audio files.
MP3 is a very popular for exchanging music on the Net both legally by artists seeking quick and easy exposure and illegally by fans swapping music.
If you haven't heard of it yet, it kicks arse. Really handy way of getting lots of good music.
To find mp3s you can go to the public, legal sites or find them using Napster or Gnutella which are distributed file sharing systems. A more community based system, much like bulletin boards, for getting them is Hotline.
A new format without the patent issues of mp3 is Ogg Vorbis which is free software in both senses and is marginally better in its quality/size ratio.