Ethereum is a trustless network of VMs which run smart contracts submitted by users. It uses proof-of-work to synchronize state across the network, and has every node execute the contracts in order to verify the state's validity. Each transaction is stored in the blockchain for replayability. Read more about it here.
Ethereum's "trustless network" model has some disadvantages:
- Transaction processing is slow - it maxes at roughly 25tx/s right now for all contracts combined.
- Every transaction costs money to execute.
- The entire blockchain state must be shared across the computing network.
- No private transactions.