In theoretical computer science, automata theory is the study of abstract machines and problems they are able to solve. Automata theory is closely related to formal language theory as the automata are often classified by the class of formal languages they are able to recognize.
An automaton is a mathematical model for a finite state machine (FSM). A FSM is a machine that, given an input of symbols, "jumps" through a series of states according to a transition function (which can be expressed as a table). In the common "Mealy" variety of FSMs, this transition function tells the automaton which state to go to next given a current state and a current symbol.
The input is read symbol by symbol, until it is consumed completely (think of it as a tape with a word written on it, that is read by a reading head of the automaton; the head moves forward over the tape, reading one symbol at a time). Once the input is depleted, the automaton is said to have stopped.
Depending on the state in which the automaton stops, it's said that the automaton either accepts or rejects the input. If it landed in an accept state, then the automaton accepts the word. If, on the other hand, it lands on a reject state, the word is rejected. The set of all the words accepted by an automaton is called the language accepted by the automaton.
Note, however, that, in general, an automaton need not have a finite number of states, or even a countable number of states. Thus, for example, the quantum finite automaton has an uncountable infinity of states, as the set of all possible states is the set of all points in complex projective space. Thus, quantum finite automata, as well as finite state machines, are special cases of a more general idea, that of a topological automaton, where the set of states is a topological space, and the state transition functions are taken from the set of all possible functions on the space. Topological automata are often called M-automata, and are simply the augmentation of a semiautomaton with a set of accept states, where set intersection determines whether the initial state is accepted or rejected.
In general, an automaton need not strictly accept or reject an input; it may accept it with some probability between zero and one. Again this is illustrated by the quantum finite automaton, which only accepts input with some probability. This idea is again a special case of a more general notion, the geometric automaton or metric automaton, where the set of states is a metric space, and a language is accepted by the automaton if the distance between the initial point, and the set of accept states is sufficiently small with respect to the metric.
Automata play a major role in compiler design and parsing.
Reference:
http://en.wikipedia.org/wiki/Automata_Theory