'Big-O' notation is used to compare the growth rates of two functions of a variable (say n) as n gets very large. If function f grows much more quickly than function g we say that g = O(f) to imply that for large enough n, f will always be larger than g up to a scaling factor.
It turns out that this is a very useful idea in computer science and particularly in the analysis of algorithms, because we are often precisely concerned with the growth rates of functions which represent, for example, the time taken by two different algorithms. Very coarsely, we can determine that an algorithm with run-time t1(n) is more efficient than an algorithm with run-time t2(n) if t1 = O(t2) for large enough n which is typically the 'size' of the problem - like the length of the array or number of nodes in the graph or whatever.
This stipulation, that n gets large enough, allows us to pull a lot of useful tricks. Perhaps the most often used one is that you can simplify functions down to their fastest growing terms. For example n^2 + n = O(n^2) because as n gets large enough, the n^2 term gets so much larger than n that the n term is practically insignificant. So we can drop it from consideration.
However, it does mean that big-O notation is less useful for small n, because the slower growing terms that we've forgotten about are still significant enough to affect the run-time.
What we now have is a tool for comparing the costs of two different algorithms, and a shorthand for saying that one is quicker or slower than the other. Big-O notation can be abused which is a shame as it is imprecise enough already! There are equivalent terms for saying that a function grows less quickly than another, and that two functions grow at the same rate.
Oh, and do I use it? Yes, all the time - when I'm figuring out how efficient my code is it gives a great 'back-of-the-envelope- approximation to the cost.
