Procedural generation has been brought into the spotlight recently (by Spore, MMOs, etc), and it seems like an interesting/powerful programming technique.
My questio
(More than 10 years later ...)
Procedural generation only means that code is used to generate the data instead of it being hand made. For example if you want to generate a forest with various trees you are not going to design each tree by hand, thus coding is more efficient to generate the variations. It could be the generation of the tree graphics, size, structure, placement ...
In general there is some kind of interation with a few rules, in addition to that you can add some randomness and logic of your own, combine all of these techniques ... Anything somewhat chaotic but not too chaotic can yield interesting results.
Here are a few notable techniques:
A few games famous for their procedural generation:
Video tutorial about Procedural Landmass Generation.
Conference on procedural content generation for games, has a lot of videos on the topic: everythingprocedural
Have fun.