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Bukkit is a third-party project, whose team develops multiplayer modifications for Minecraft servers (known as Plugins). The Bukkit mod changes how a server is run and modified, with a focus on performance and the ability to customize the server.
Bukkit introduces a unique customizing interface that allows the owner of a server to install and manage plugins, or update a server, all while the server is running. Bukkit's main competition is "hMod". However, compared to hMod, Bukkit runs more efficiently and also has recurring updates. Bukkit frees up Minecraft's ability to run multiple threads at once, instead of using a single thread like hMod.
For more information, visit Bukkit.org.