People talk of it as a free operating system. This happens to include the meaning of free in price, but really it's using the word free like free speech or freedom.
The principle idea is that you should be able (legally, morally), to edit anything you want on your own machine, if you own it. With other systems, like Microsoft Windows or Apple Mac OS X, you're at the mercy of that company. If they change something that you don't like, tough.
Linux is very popular on servers. Many websites run it, as it's very stable, and uses resources very well. It's also running in many small devices too, due to the latter advantage I've just given.
However, it is different to Windows, just as Mac OS X is different to Windows.
Much work is being done to make it more user friendly for the average PC user, but due to its background and more technical userbase, some more 'technical' aspects are still there, that aren't with Windows. For example, you may have to change some setting by entering commands, instead of just clicking a few tick boxes. This isn't as mandatory as it used to be, but it's still there (and will likely remain for a long time).
Ubuntu is a 'distribution' of Linux that is widely used and well-supported.
http://www.ubuntu.com
If you fancy diving in and giving it a go (perhaps before buying a netbook), you can freely download a CD image, burn it to a disc, then try it on your own computer, straight from the CD. Once you've finished playing, you can click restart, and the CD will be ejected and you'll be back to Windows, without any changes.
Most netbooks come with a custom version of Linux that the manufacturer has chosen, but it's pretty easy (given the freedom nature of Linux explained above) to install Ubuntu or some other distribution you prefer.