A size of toy or model electric train. O is the size, and gauge refers to the distance between the outer rails. The gauge of the O train is 1 and 1/4 inches. The most prolific maker was Lionel. O gauge also refers to the basic curve of Lionel trains, that being 31 inches in diameter.
An older type of toy electric train, so named beccause it was meant to travers a 27 inch diameter curve. Usually sold as a cheaper version of O Gauge, a common train typified by makers such as Lionel. O27 was made by Ives, Lionel, Marx and K-Line. It is still made by Lionel.
O27 has the same gauge (distance bwteen outer rails) as regular O Gauge trains. This distance is 1 and 1/4 inches.
I have one of those Marx O27 sets.
The O27 is not as fancy as O Gauge, but it is a lot of fun!