Acronyms are a linguistic feature of modern European languages (English, French, German, etc) in which an abbreviation is formed from the initial letters or syllables of several words and pronounced as a normal word. Acronyms are written in upper case except for those acronyms which entered popular consciousness before the concept of the acronym did (i.e. laser and radar).

Prior to the second world war acronyms were limited to the military, but the close working relationship between the American and British military and scientific establishments incubated during the war led to the use of acronyms spreading from the military and they are now widespread in organizational, scientific and military documentation.

A great site for generating real looking but fake acronyms is: http://brunching.com/toys/toy-acronymer.html
and there is a web page that extracts acronym definitions from other web pages at http://cadia.cs.umass.edu/irug/acro/getacros.html
There's another system (not on line) described here: http://www.cs.waikato.ac.nz/~say1/pubs/tech_report01.ps.gz

There are also backronyms, which are post-hoc acronym meanings for words. recursive acronyms are particularly interesting, but they appear to be only generated in a self-conscious fashion. At the time fo writing the author was unaware of any co-recursive acronyms.