Argh! I had typed up this great response when IE crashed on me. Let's see if I can do it again!!!
Acid is a loop-based program. You can use many types of loops, but it works best when the loops have been "acidized," meaning that key and tempo information is within the loop data. This allows you to change tempos or keys and usually it does not drastically alter the sound of the audio. You can also record into it like other programs with the option to "acidize" your audio or not. It used to be that you could only record one track at a time, whether mono or stereo, but the newest version allows for mulitrack recording - a feature many people have wanted since Acid first came out. It also offers MIDI and VST support, as well as DirectX effects. Comes with a basic soft-synth and MIDI piano roll editor. Oh and you can also import video to it.
I use Acid when I want to use loops, and its big brother program Vegas for recording bands, etc.