I have had the pleasure/misfortune of attempting to explain this at least a dozen times and never have the complete answer I want handy. So instead of having to hunt the info down I am just going to republish it. This one is for you Jean. Enjoy!

How blogs work in 7 easy pieces 

"The gang over at Streamline have blogged a great primer describing how blogs work. Excellent stuff."

How Blogs Work in 7 Easy Pieces Click on the diagram to get a full-size, non blurry image and scroll down for details.

Summary of How Blogs Work in 7 Easy Pieces

1. Joe Blogger writes something and publishes it to his blog.
2. Joe's Blog system updates his site's HTML, updates his RSS file and sends a 'ping' message to the 'Aggregation Ping Server' indicating that his site has updated.
3. Search engines like Google and RSS specific services like Feedster, Technorati and PubSub periodically ask the Aggregation Ping Server, "Which sites have updated?".
4. Since Joe's site sends pings and has an RSS file and is easy to update frequently, Joe's search engine rank is higher than a 'normal site'.
5. Techie Teresa uses a program called an RSS reader to subscribe to Joe's site. The RSS reader checks Joe's RSS file for updates periodically (usually once/hour or once per day) and notifies her of Joe's updates. Teresa no longer wastes time manually surfing Joe's site. She just checks her RSS reader.
6. As a result, Teresa's information flow is more efficient and she can monitor more sites in less time.
7. Joe Surfer (who is not related to Joe Blogger) still can access blogs the old fashioned, slow and less efficient way using his web browser and search engines.

Notes (for those who care about details):

1. This is typically done today using a web browser and clicking on a button I have generically labeled "Publish". It will vary depending on the system used. e.g. Blogware and MovableType uses the word "Save" instead of Publish, Radio uses "Post to Home Page", etc. Most blog systems also allow you to update your blog via email.
2. Blog systems automate the creation of web pages, linking together pages and archiving old pages and creating and updating the RSS file. So bloggers don't think in terms of 'pages' or HTML, they think in terms of posts (short chunks of writing such as 'once upon a time...' because the blog system takes care of creating HTML pages out of multiple posts. This allows bloggers to concentrate on writing rather than technical site creation.
   
   There are other syndication formats. RSS is just the most successful. Atom is a syndication format that is new and gaining momentum.
   
   RSS was popularized by blogging but there is no reason why non blog sites can't have RSS files. In fact a lot of non blog sites like the New York Times, the BBC, etc. have RSS files as well.
   
   The first aggregation ping server was weblogs.com. Now there are many more such as blo.gs
3. It's more complicated than this. I have glossed over the technical details but that's what happens from a high level.
4. Rather than waiting weeks or days, to re-index a site, search engines re-index blog sites much more often (sometimes within minutes for Feedster, Technorati and PubSub) since they know right away when the site has updated. This leads to a more accurate search results and a higher search engine rank. So Joe's search engine rank is higher simply because he sends the 'ping' message and updates an RSS file without Joe having to manually register his site on search engines or hire an overpriced search engine optimization firm.
5. We recommend Bloglines (free hosted solution like Hotmail for RSS), NetNewsWire (Mac) and FeedDemon (Windows) for your RSS reading needs but there are plenty more!
6. If you want to make more money or care about getting the latest knowledge first, then an RSS reader (despite their crudeness; RSS readers and blog systems are at about the 'Visicalc stage' of evolution to use a spreadsheet analogy, the Excel of blogs and RSS readers will emerge in the future!) is an essential tool in your toolbox.
7. Blogs are normal websites. The only 'magic sauce' is the RSS file and the pings and the fact that blog systems automate the tedium of archiving, constructing HTML pages and linking them together. Otherwise they are identical to any other website so even people who don't know about RSS can access them and use them.