OpenID is a decentralized single sign-on system. Using OpenID-enabled sites, web users do not need to remember traditional authentication tokens such as username and password. Instead, they only need to be previously registered on a website with an OpenID "identity provider" (IdP).
That is the simplest definition. It is all about bringing sign-on procedure to be done once in a while with single identity.
In a nutshell, the OpenID technology makes life simpler by having only one username and password to remember.
Yahoo! isn’t only providing this support for its own services but also its users will be able to login to other websites supporting OpenID 2.0.
In addition to the many leading Yahoo! services users already enjoy, anyone with a Yahoo! ID will be able to use the same ID for easy access to any sites that support OpenID 2.0.