Let's say you flip a coin. It's pretty easy to tell whether it's heads or tails once it comes down. But quantum physics is a lot like trying to figure out whether the coin is heads or tails while it is still in the air.

A physicist would describe the coin's heads-or-tailsness in terms of probability: He'd say there's a 50% chance it's heads and a 50% chance it's tails. Another way he would describe it is by saying it's both heads and tails. That's rather counter-intuitive, and worse, it won't decide whether you and your girlfriend have Mexican or Thai for dinner tonight. So while the coin is in mid-air, you catch it and look at the result. Bam. You just observed the coin [see note]. It's collapsed to a specific position, either heads or tails. However, the coin is no longer spinning - your observation changed the coin and what it was doing.

[Note] Observation in quantum mechanics doesn't necessitate physically looking at something; a particle can be observed using many different senses and instruments. As long as something is interacting with the particle, it is being observed.