TLDR: Etherum is a computing platform running on computers all over the world. To run programs on the network you pay Ether (ETH); you can program on the Ethereum network using a language named Solidity.

Ethereum is kinda nerdy

But that's ok, so is the internet. It's not hard to understand though, so don't be scared by all of the jargon! Here are a few keywords to get started.

Decentralized - computers located all over the world, working together, if half of the computers are turned off, the other half will continue operating as if nothing happened.
Cryptocurrency - a kind of digital money that gets its value from having computers do hard math problems.
Computing Platform - this is a fancy way of saying a network of computers that run programs together.

Ok! So now we're going to put all those terms together to try and explain what Ethereum is.

Ethereum is a decentralized computing platform that executes programs anyone can create. In order to pay for the computing power used to execute these programs you pay with a cryptocurrency called Ether.

So what, why do people care about Ethereum so much?

If you've heard about Ethereum it's probably for one of two reasons:

Speculative investing - because you can buy Ether at places called exchanges and more and more people are buying Ether, less of it is available and so the price is rising. However, like buying stocks in the stock market where companies can have ups and downs, Ethereum could experience this too, and the Ether people buy could lose value very rapidly.
Technological excitement - many people are excited about Ethereum because, much in the same way that the internet changed how everyone communicates, Ethereum has the potential to change how much of the world exchanges money, and organizes around trust.

Ok, so should I do anything about it?

Probably not right now, unless you're pretty nerdy or you understand how investing works (and have money to lose). Ethereum is too new a technology to worry about.

Data: http://whatthefuckisethereum.com/