TP gets this question a lot - "What is an Affiliate Program?"
Here's the answer in simple words:
An affiliate program is all about making money selling other people's stuff online, usually via one's blog, website or social networking page (i.e. Twitter, Facebook). The money basically comes from commissions from sales.
What to sell?
A lot of things - services, physical products, virtual goods, software, blog templates etc. - it depends on you really. It is recommended though that you sell stuff which are related to your site's content or main theme.
How do I sell affiliate stuff on my website?
Simple, via Affiliate links or banners that would redirect your interested readers to the seller's online shop. When you apply to an affiliate program, you will be given a unique affiliate ID, which will also be automatically attached to all of your affiliate links and banners. So when a reader buys a product via that unique ID, the seller would know that he owes you a commission on the sale.
What % commission do I get?
It depends on the terms and conditions of the Affiliate program - some offer around 10%, others as high as 50%.
Where can I find Affiliate Programs to implement on my website?
Websites like CommissionJunction and Click Bank collate most affiliate programs out on the net right now. They even provide metrics, which help you keep track of your commissions and other stats.
Here's a simple diagram illustrating what Affiliate Programs are all about (e.g. Amazon Affiliate Program) courtesy of LowHangingLoot.com:
There you go. :)