I am assuming you know what an avatar is. I am also assuming you have heard of OpenID and WordPress. Gravatar is giving your Avatar an OpenID like status across sites.
Once again, what does this do?
It puts an avatar image next to your comment on all supported sites and blogs without making you upload an image on different sites.
OpenID is linked to your URL. Gravatar is linked to your email address.
Gravatar supports multiple email addresses. There is a very simple interface to manage your avatars for different email addresses in one place.
Several WordPress themes come with built-in support for Gravatar.
Automattic (the parent company of WordPress) has taken over Gravatar.