Bit-Tech put up an article which aims to de-mystify shaders.

Shaders are small programmes that alter pixels or vertices. Consequently, there are two major types of shader - pixel shaders and vertex shaders. These programmes add effects to basic geometry - so a water-styled shader can be added to a flat blue texture to make it look reflective, or a glass-styled shader can be added to a polygon to make it appear transparent.

A bluffer's guide to shaders