Spaces allows you to make multiple desktops for better organization. You can have a separate desktop space for Safari and Mail, and another for iTunes, and maybe another for iPhoto and iMovie. You can drag windows from one desktop to another. You can rotate through your different desktop. Apple allows up to 16 different desktops at one time. If you use the dock or application switcher to switch to an open application, spaces will automatically switch over to the appropriate desktop that the selected application. Spaces is just yet another great time and organization feature in Leopard. Once you use it, you'll never know how you used a Mac without it!
Home>Information>Mac OS X>Spaces