BitTorrent (often abbreviated to 'BT') is a protocol that allows you to download files quickly and efficiently. It is a peer to peer protocol, which means you download and upload to other people downloading the same file. BitTorrent is often used for distribution of very large files, very popular files and files available for free, as it is a cheap, fast, efficient way to distribute files to users like you.
µTorrent is a BitTorrent client. A 'client' in this case is a computer program that follows the rules of a protocol. For example, HTTP (HyperText Transfer Protocol) is the protocol used to download web pages and other content - like this page - and your HTTP client (or browser) is the program you use to get those web pages. Some popular browsers include Microsoft Internet Explorer, Mozilla Firefox, Google Chrome and Safari.
Just as there are multiple web browsers, there are multiple BitTorrent clients, and µTorrent is one such BT client.
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