"The Internet of Things (IoT)" is the interconnection of uniquely identifiable embedded computing devices within the existing internet infrastructure..." (read more).
This is enabling a newer and smarter world, where any device can communicate with any other, anyone can connect to anyone else (possibly, not just humans), and all this is expected to make the world better in some way.
While the tech-world is abuzz with this and a lot is happening in this space, it's probably best to first get some basics in mind, and the infographic below helps us to grasp the evolution of these things through the ages.
(Ctrl+Click to enlarge)