Adware is advertising delivered directly to your computer. Generally, a program puts ads on the screen at some regular interval. In some cases, this program can be installed without the user's knowledge, but not always. Many programs clearly state on install that "this program is supported by advertising, and if you turn off the advertising, you also shut down the program." Adware tends to be a "grey area" in the malware family. Yes, it can run without the user's knowledge, and yes, it can bog down the system (especially when the adware program goes online to retrieve new ads to display).
At the same time, adware is generally more open about what it does, giving the user the choice to install the program the adware is attached to. Adware is most often tied into Internet Explorer somehow. The ads that appear are browser windows. When it's installed above-board, adware is generally accepted by the internet community as a valid marketing system, even though it can include elements of spyware (ie, it tracks information, and uses that information to deliver targeted ads to the user). If one user of a system installs adware on a system, and another user is then tracked, then the program crosses the line from adware to spyware--because the second user is being tracked without their consent.
Some other forms of adware have used sneaky programming tricks to hide or cover website advertising. For example, an adware program can read an incoming website, and learn the location of a banner ad on that page. Then, the program can use that information to put an ad of it's own in the exact same spot, hiding the legitimate ad. This deceptive use of adware is often called "stealware" because it steals the advertising space from the original website.
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