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As far as private investors are concerned, they're closed-ended, like investment trusts. This means that they can avoid most of the administration costs involved with creating and cashing-in units. The flip-side of this is that ETFs are not organised to do this and you will have to find a broker to buy and sell them for you. If you want to invest in ETFs via an Individual Savings Account (ISA), then you'll need to get a 'self-select' ISA from a broker to put them in.
To the big institutions, however, ETFs appear open-ended, like unit trusts. So, if a big bank turns up with a few million in cash, then the managers of the ETF will issue some new ETFs for them. Similarly, if someone turns up with a few million of the ETFs, then the managers will turn them back into cash for them. The effect is that ETFs should trade very close to the value of their underlying assets, without the 'discount' associated with 'closed-ended' funds like investment trusts.
The ETFs currently available in the UK are known as iShares and they're index trackers. In other words, they track a particular stock market index. In the case of iShares, they aim to do it by fully replicating the shares in a particular index - giving a very small tracking error.
The most well-known iShare is the 'iFTSE 100' which tracks, can you guess (?!), the FTSE 100 index. There's also the iShares S&P 500, which tracks the S&P 500 index in the United States, as well as a variety of funds tracking particular industry sectors in the UK and Europe.
Find out more in our ISA centre.