The chaos theory is a certain field of study in mathematics, and if you've seen 'Jurassic Park', you may remember Dr.Malcolm explaining to Dr Sattler why he disagreed with John Hammond about having dinosaurs on the island. It was in fact the chaos theory he explained in very simple terms. It's quite hard to explain in detail though, but I'll give it a go. There will be much more you can add to this of course - I'm no scientist. :)
The chaos theory is normally attributed to Edward Lorenz. Although there had been previous work on chaos, it hadn't really been explored in much detail. It was Lorenz's work that in a way revolutionised the way we think about chaos.
In 1961 Lorenz was working on a weather system that could predict the weather by using a system of equations. Lorenz decided to recreate a past weather sequence, but began mid way only printing out to three decimal places instead of the whole six. For example; 5.323 instead of 5.323451. On the surface, Lorenz did not expect this tiny change to have an affect on the end results. However, much to Lorenz's surprise, that small change radically affected the sequencing and changed its whole course. From this Lorenz was then able to determine that even the tiniest changes can have a huge effect on the long-term outcome, whilst short-term, it would appear as though nothing dramatically had changed whatsoever.
Since Lorenz's weather machine, there has been numerous scientific papers been wrote over the years about the chaos theory, by a number of different people.
The chaos theory studies the effects in dynamical systems, seeking to predict or explain the outcome through seemingly small factors. This effect is often called the butterfly effect. A small change in one place during the system may result in vast differences to the outcome, and so to predict the outcome, these factors and small changes will need to be taken into consideration.
The butterfly effect may at first appear to be an unusual occurrence, but when stopped and thought about can actually be found in many simple systems. For example: rolling a football along the ground. You may roll the ball in seemingly the same place each time, however, the ball never lands in exactly the same place. Some small initial factors are needed to be taken account for; things like varying force used to roll the ball, tiny bumps on the ground, wind direction, how you roll the ball etc... These may seem like small things to note, but can actually cause the outcome to be vastly different.
The systems that the theory of chaos are used for are purely deterministic. This means that there are no random elements involved but is based purely on initial conditions. However, just because there is no random events involved in a deterministic system doesn't make outcome-prediction simple. In fact, long-term prediction is generally impossible, and simply because these systems are deterministic does not make them predictable. This is known as chaos.