It has to do with the size of the sensor. Full frame dSLRs have a sensor the size of 35mm film. We refer to a smaller sensor (like the common APS-C sized ones) as a cropped sensor or cropped body. It is important to note when talking about lenses because the cropped bodies have the effect of increasing the focal length of the lens. On a Canon 40D (which has a 1.6x crop factor) the effect is to give a 50mm lens a cropped view that is similar to a focal length of (50mm x 1.6) 80mm on a full frame camera.

It is better explained here: http://www.millhouse.nl/digitalcropfactorframe.html