Even non geeks have heard about the Google Panda update. But what exactly is it?
In simple terms it's a quality filter and this is how it works.
Google got a lot of people together and asked them to rate sites against a long list of criteria. They asked questions like, "Would you trust this site with your credit card". There's a longer list of the criteria here on Google's blog.
They then looked at the characteristics of sites that the test group liked v the sites they didn't like and from this they developed, and are still further developing, an algorithm that can classify sites against the real world results using that good old oxymoron, artificial intelligence. They have effectively mimicked a manual review in such a way that the process can be scaled.
Panda isn't constantly running, it would take too much computing power, but rather it runs every few weeks or so which means if your site went down the rankings and you improved it you may not see the results of your efforts straight away.
Why 'Panda'? Simple, the artificial intelligence used for the above process was largely developed by Google engineer, Navneet Panda :)