The Arduino is a physical computing platform. It is basically a tiny computer on a board that you can use to control LED’s, Motors, Servos, Transmitters, etc. or anything you like.
Arduino can be used to develop interactive objects, taking inputs from a variety of switches or sensors, and controlling a variety of lights, motors, and other physical outputs. Arduino projects can be stand-alone, or they can be communicating with software running on your computer (e.g. Flash, Processing, MaxMSP.) The boards can be assembled by hand or purchased preassembled; the open-source IDE can be downloaded for free.
Arduino is popular because the hardware is cheap, it’s easy to program and there is a huge web community, which means that beginners can find help and download myriad programs for the board.
Some examples by Arduino:
MIDI fader controller with Arduino
From the MAKE Flickr pool
Kid robot costume for Halloween
List of Sensors can be used with Arduino:
Infrared rangefinder(IR) sensor
Passive Infrared(PIR) Sensor
Ping sensor – detect objects in front of an object
Tilt sensor – detect the tilting of an object
Passive Infrared Sensor
PD sensor – that reads sensor values from Arduino