Since I've signed my first contract for an e-book short story, I've gotten lots of questions about e-books from friends and family. I'll try to give an intro that seems to cover most of the basic questions.
An e-book is an electronic book or story, frequently in Adobe PDF or similar format. It's purchased online and downloaded to your computer, PDA, or even mobile phone. It's intended to be read on the device and not intended to be printed. Ebooks cannot be shared with someone else when you're done reading it. Some have DRM (Digital Rights Management), to prevent piracy, and would need a specific e-reader installed for you to access the book. DRM varies with differernt pubishers.
There are three types of e-book publishers. First, a large publisher has a print book that they also release as an e-book, like they might release an audio book. Second, a small press publisher may release a book first as e-book, then later in print. In part, this is because print takes much longer to release than an e-book. Another reason for this, some publishers only move ebooks into print based on how well the e-book sells. The third type of e-book is from a publisher that only produces e-books. These e-books will not go into print while they're under contract with that publisher.
The reason the e-book market is attractive to me is that short stories are difficult to come by in print. I enjoy reading and writing short stories, so the e-book market fits me just right. If you enjoy short fiction and haven't read an e-book, then I hope you give it a try. Another large draw for me to write for e-book publication, the e-book publishers are more likely to accept genres or plot ideas that are a little different, and I like to read and write stories that are a little bit off mainstream fiction.
Specifically for me, my first story, Wolf-Bitten, coming soon from Cobblestone, will be an e-book and for the forseeable future, will not go into print.
If you have any more questions, check out the Wikipedia article on e-books, or leave your question in the comments. I'll do my best to give a coherent answer.