Dropbox.com is one of those services that once you come across you wonder why no one created it before. The first thing I have to say about Dropbox is that if you have not already, click on the link and sign up (clicking on link to sign up gets you an extra 250mb free [see 'note' below]).
The simplest way to describe Dropbox is as a folder that exists both on your computer and in the cloud at the same time. When using it, if you did not know it was the Dropbox folder, you would not notice any difference from all the other folders you have. That explains the simplicity of the service. There are no new complicated menus or strange user interface, it is just a familiar folder.
Once you put files in the Dropbox folder the 'magic' begins. Anything you add to the folder will be uploaded to your account seamlessly, automatically, and in the background (no appreciable impact on your computers operation). If you make any modifications to the files, Dropbox only uploads the changes made. That means that the document/file is up to date without the need to upload the entire thing again. Those alterations are remembered and you can recover older versions of the file (30 day limit on revisions for free account, unlimited on paid).
What makes the service really useful is the ability to put that same folder on different computers. I said you could think of Dropbox as a folder that exists both on your computer and in the cloud. You can also put that same folder on any computer, or on any of a growing number of compatible devices/phones, at the same time. Any modification made to the folder on one computer is uploaded to the cloud and then downloaded to the other computer/devices; automatically, seamlessly, and in the background.
You can invite other users to share specified folders as well. That means the same sub-folder would exist on all of your connected computers and all of the person/people's devices. Just make sure you let the person know that any changes they make to the shared folder will effect you as well. Once your files are in the cloud you can also share any one in particular with direct links.
The free version of Dropbox starts you off with 2gb (2.25gb if you use the referral link provided and get the 250mb bonus). There are ways to get more space for free after you sign up or you can pay for additional storage. I will have a follow up post on how to get that extra free space. Update (2/6/2011): Maximizing Free Dropbox Storage Space End of update:
Note: I used a referral link for Dropbox.com which if you sign up from the screen you are brought to after clicking on it gives us both an extra 250mb of space free.