Ah, well, I'm still not sure, but let me try and explain the way I understand it: it's like sms (text) but public, so everybody can see who you text and what you text. You have a maximum of 140 characters per message. Twitter itself suggests you answer the question 'What are you doing?' on a regular basis. You can do this on the web or by phone, the latter being why it's so popular apparently.
It also has an option kind of like the flist, but it's called 'following'; you can select people who's messages you want to watch.
As you know I don't have a cellphone and I can put most of my messages online in my journal or blog, but since I'm a sheep I had to follow the crowd. (or more specifically follow certain people. I'm not a sheep, I'm a stalker;)