The video below, created by Vidoop.com, gives a great overview of the technology.
OpenID is a system of identification that simplifies registration and login by allowing you to use the same digital identity with any website or application that supports the standard. Here's how it works:
The relying party then parses this identifier into a URL or XRI which points to your account with your identity provider.
The relying party allows the identity provider to validate the identity of the user using either an ajax popup or redirection.
Once the identity provider has verified the identity of the user, it notifies the relying party and provides any information that the relying party needs, like first name or e-mail address (assuming that the user allows the information to be shared).
The user is logged in/registered without filling out long forms.