Overclocking is increasing the clock speed of the CPU past what is has been built to safely work at. For example, an AMD 64 3500+ has been built to work without any heat issues at 2.2Ghz, however, it can
work faster than that, though it's not always considered safe and it can overheat. Overclocking is accomplished through the BIOS.
Actually, someone else summed it up pretty well already.
Overclocking is very tricky and you should know what you doing before you start. I will *try* to explain the dangers but you should really seek more information about it before you start tinkering with OC'ing.
First youll need to make sure that you BIOS will suport overclocking. To do think enter you bios ( your start up screen will usually tell you what buttion to push to enter it; its noramlly F6 or del ). Next search around in your BIOS for either a core voltage value or a clock speed value.
Core Voltage is how much power is being used in your processor. You will want to up this by very tink increments, run your computer using proessor intensive software for aroud 15-20 minutes then check your CPU temp. As far as temperature go you do not want to exceed any more that 120F ( IMO ).
Clock speed is how many "revolution" you processor is making. Normally the default vaule is 200Mhz. You will also want to make small increments with this value. When you play with the clock speed you will see you overall processor speed change ( in tools like system and any 3rd pary programs that read CPU speeds ). Once again you will have to worry about CPU temperature and watch them carfully.
The trick is to find an efficent balence between core volatage clock speed and temperature.
There is a possibly that you overclock too far you will get what is called the "black screen of death". When this happens dont freak out its not a big deal. All you have to do is take out your BIOS battery for 2-3 minutes and then replace it and restart. This is called flahsing the bios ( or in laymens terms reseting the bios).
The most important part about overclocking is cooling ( why i saved it for last ). Better cooling means you can overclock futher. If you are going to overclock you NEED to buy after market cooling products ( larger heatsink high revolution fans water cooling set ups etc ). I personally have my system water cooled and overclocked from 2.8 GHz to 3.0 Ghz. Youll notice that this isnt a large step but my CPU temp is extremely low ( the highest ive EVER seen it is around 95F ).
There is alot of danger involed with overclocking so you really need to do the research before you start.
I'd highly suggest against overclocking if you don't know what you are doing since it can damage your proccesor.