Gamification is one of the hottest buzzwords in Silicon Valley these days. Simply put, the term refers to incorporating game elements and mechanics into non-gaming websites and software.
***Update: A reader pointed out that gamification was recently the topic of a Steven Colbert interview***
Pretty much every startup we meet with these days has some form of game functionality included in their product.
Examples of gaming elements being used outside of traditional games include leader boards, badges, progress bars and virtual prizes.
LinkedIn, for example, provides a progress bar that indicates how much of your LinkedIn profile you've filled out. They've found adding the progress bar greatly increased the number of people who filled out their entire profile. Mine's at 85%.
Another example is the location services company Foursquare. They use badges and other game like rewards to increase the number of times users enter their location data.
The gamification trend is not new - it's been going on for years. But the growth of social media and the success of casual game like Farmville (it has several hundred million users) has led to a surge of interest in bringing gaming UI's and engagement methods to a broad range of products.
For more information on gamification, visit the NewsTopiaVille site. It is explores the use of game elements in delivering the news, but is also a great general resource on the gamification trend.