Smart dust is one of my all time favorite buzz words. It refers to tiny wireless sensors that detect anything from light to temperature to humidity to vibrations.
They're called smart dust because the idea is lots of them would be deployed, they'd be really small (the size of grain of sand or smaller) and they'd float and lie around, like dust.
Despite their small size, a smart dust "mote" (the term used for single smart dust sensor) would contain sensors, computing circuits, bidirectional wireless communications technology and a power supply.
To do this, advanced micro-electro-mechanical systems (MEMS) would need to be designed and fabricated. When you hear the term MEMS, think really,really tiny machines.
I first heard about smart dust more than a decade ago while visiting a research group at UC Berkeley. I also visited Dust Inc., which was a really hot startup at the time. They tried to develop smart dust peer-to-peer wireless sensor networks. They failed.
Since then I hadn't heard much about Smart Dust until last week when O'Reilly Radar blog had a post called The Inevitability of Smart Dust. They describe smart dust as:
General purpose computing, sensors, and wireless networking, all bundled up in millimeter-scale sensor motes drifting in the air currents, flecks of computing power, settling on your skin, ingested, will be monitoring you inside and out, sensing and reporting — both for you and about you.
This is obviously more than a few years away, but it's fun to think about.