An article is a piece of topical information written for the purpose of SEO.
People write articles on topics that are of interest to them or are related to their business/market.
Article marketing is all about broadening your visibility for certain search phrases and topics on the internet.
Articles are created by the webmaster (owner of the website) and then uploaded onto article marketing websites.
The idea being that the articles are written providing relevant and topical information about a certain topic and then point back to the target website.
So for example, an owner of a website about garden tools could set up their website and post articles about garden tools on their website.
They would then write a series of articles about specific sub topics (spades, lawn maintenance, weatherproof shears) and submit them to article websites.
These articles would use keywords in them pointing back to the owners website (and the articles on the site).
An article directory is a website that is set up exclusively for the purpose of hosting other peoples marketing articles on.
Website owners would create unique content on their own websites. Then produce related articles to submit to the article directory and point back to their own websites for SEO purposes.
There are hundreds of article directories on the internet, some of the best known ones would be:
These sites are free and other than the time needed to create the individual articles, there is no cost in producing articles for SEO purposes.
Stand alone articles are OK, but the best strategy for article marketing is by daisy chaining them.
Going back to the garden tool website; a stand along article would be 1 article written relating to a subject or article on the site, and posted to one of the article directories above.
This would involve writing a series of articles around the topic/page on your website and then adding each one to a different article website.
The thing about daisy chaining the articles is by making them point to each other and back at your own website. This adds more authority (in that the links will also be going to other articles you have on the other article websites, which would have a high PR rank).
Daisy chaining articles brings more authority to your articles and as such bring more authority to your website.
There are article writing websites (that will take an article and adapt it so that it tricks search engines into thinking that the modified articles are unique).
However this is not advised. Natural article writing is by far the best way to keep quality high and show search engines slow and steady progress up the ranks.