Excerpt from the soon to be released Etherparty.io white paper:
In 1997, Nick Szabo introduced the idea of Smart Contracts, the idea that through “highly-evolved” contract systems, societies would be able to form societies with better law, more efficiently, and distributed trust. In their most basic form, smart contracts (also known as DApps, DAOs, and DACs) are a computer executed contract embedded in unalterable code. Smart contracts make securing relationships, creating applications, and deploying code cheaper and more efficient. The issue that has plagued the idea of true smart contracts is the lack of a sufficient decentralized computing network capable of serving as a trust-less intermediary for executing contracts in an unalterable way.
Smart contracts allow for a number of possibilities, including provable, trestless gambling, hedging coins, and even coins within a coin (namely Ethereum).
The possibilities are endless, and with Etherparty, you are able to create decentralized autonomous applications with a few lines of code.