1. An operating system kernel that was developed in 1991 in Helsinki, Poland by a programmer by the name of Linux Torvalds. Torvalds made an interesting choice as to making the kernel open-source, meaning that anyone was allowed to look at the kernel's code, use it, modify it, and/or redistribute it. Over the years, the kernel was patched, modified, and redistributed so many times that it's more stable and secure than Microsoft's Windows NT kernel, which has been doing nothing but collecting dust over the last 20 years.
2. A series of UNIX-like operating systems made using the Linux kernel. Ubuntu, Debian, Fedora, openSuSE, Slackware, Mandriva, Gentoo, these are all popular Linux distributions. Some are made for power-users, others are made for the average user, looking for a better computing experience. Linux has a horrible reputation about not being user friendly, and that's partially true. But more recent versions of Linux such as Debian, Ubuntu, Mandriva, etc. are very user friendly, and have graphical tools so that you wouldn't have to use the command line utility most of the time.
Linux was and always will be the pioneer of the open-source world. The kernel's currently up to release 2.6.39.
Nearly everything we use today, be that calculators, ATMs, or even your own smartphone is powered using Linux. 10 of the world's fastest supercomputers use Linux as its kernel.
GNU/GPL software make up the rest of the operating system and apps. "GNU/Linux" is the way lawyers say it in court.
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