Geothermal is quite simply, heat from the earth. The center of the earth, about 6400 kilometers deep, has a temperature of about 5000-7000 degrees Celsius. Geothermal energy is simply tapping into that body of heat. Throughout the earths history, people have tapped into naturally occurring heat springs and other natural leaks of heat, for cooking and heating. But most of the heat, and any reliable heat is trapped under the earth core and we must drill wells to access it.
Geothermal energy can also be used to generate electricity. This is done by using turbines in the path of escaping steam, and usually pumping water back down to replenish the lost water. Currently the world produces about 7,000 megawatts across 21 countries, the equivilant of about 155 million barrels of oil each year. Individual geothermal power plants can be as small as 100 kW or as large as 100 MW.