Essentially it's a piece of software that has the following objectives:
1) reproduce (it does this by purchasing VPS's with bitcoin, spawning another instance of itself, and sending it seed money to get it started).
2) earn money (in order to survive and reproduce)
There is a project to do this in the physical world (self-reproducing automation):
http://www.seed-factory.org/ book:
http://en.wikibooks.org/wiki/Seed_Factories