Tor is a proxy network used to improve anonymity and safety when using the Internet. Tor is free and based on open source code.
Normal proxies often use a single-step connection, which means that even though they protect your personal information from being available to the websites you visit, your privacy might still be compromised by the owner of the proxy or by a hostile party hacking into the proxy server. Tor, on the other side, uses so-called onion layer routing, which means that instead of being routed through a single proxy, the data will be sent step-by-step in an encrypted circuit through a network of proxies. The circuit used often changes, and the proxies in the middle of the chosen route don't know the beginning or the end of the circuit; only which other proxies it receives data from and forwards to.
The end user runs a program called a Tor client on his computer. Using an extra filtering program (like Privoxy) between the Tor client and the Internet browser on the local computer is recommended due to the risk of the application revealing user information. Any Tor user with sufficient bandwidth can also choose to run a proxy himself, letting other Tor users route traffic through his computer.
"Tor" (Original BoyWiki Article)
"Tor (anonymity network)" Wikipedia Article