This is what I was asked today. So how do I explain it?
Geocaching is basically a high tech treasure hunt where you get the co ords off geocaching.com put them onto your gps device and head off in search of the box aka cache.
Once you get down to a few feet you hunt around for the container, this can be small dog tag micro or up to a huge box. They can be devilish as in a cache hidden inside a hollow log to a magnetic sign with a logbook inside it.
As more and more phones come with gps you can download an app to your phone to start with before moving onto a proper gps.