Events are user interactions with content that can be tracked independently from a web page or a screen load. Downloads, mobile ad clicks, gadgets, Flash elements, AJAX embedded elements, and video plays are all examples of actions you might want to track as Events.
Here is an informative article about the basics of Event Tracking in Google Analytics: http://techwy.se/PraCZ
Also, here is a great resource that explains all the HTML Events with live demos: http://techwy.se/qwmwQ
~sree