fMRI is a special application of MRI used to look at brain function, more or less. As the various parts of the brain work, they demand freshly oxygenated blood; the sudden perfusion of blood to a particular brain area in response to increased workload causes the magnetic susceptibility of that brain area to ever so slightly change -- In other words, the signal emitted by any particular piece of brain will fluctuate over time depending on its supply of oxygenated blood and the rate at which it metabolilizes that supply.

The cool part is this: if you know what your particular brain is thinking about at any given time during the scan (i.e., you give the brain some interesting cognitive task to do,) you can associate brain the signal changes you see with the task that the brain is working on.

The most common application of fMRI is in research, usually cognitive neuroscience research. Psychiatrists and radiologists also use fMRI methods in the hopes that they may be some day developed to the point they can be used to diagnose or even treat disesase.

And the BEST part is that fMRI requires *really* powerful magnets, fiber optic button boxes and ton's of NIH dollars.