Node.js is an open source command line tool built for the server side JavaScript code. You can download a tarball, compile and install the source. It lets you run JavaScript programs.
The JavaScript is executed by the V8, a JavaScript engine developed by Google which is used in Chrome browser. It uses a JavaScript API to access the network and file system.
It is popular for its performance and the ability to perform parallel operations.
Understanding node.js is the best explanation of node.js I have found so far.
Following are some good articles on the topic.