Schrödinger's cat is a famous illustration of the principle in quantum theory of superposition, proposed by Erwin Schrödinger in 1935. Schrödinger's cat serves to demonstrate the apparent conflict between what quantum theory tells us is true about the nature and behavior of matter on the microscopic level and what we observe to be true about the nature and behavior of matter on the macroscopic level -- everything visible to the unaided human eye.
Here's Schrödinger's thought experiment: We place a living cat into a steel chamber, along with a device containing a vial of hydrocyanic acid. There is, in the chamber, a very small amount of hydrocyanic acid, a radioactive substance. If even a single atom of the substance decays during the test period, a relay mechanism will trip a hammer, which will, in turn, break the vial and kill the cat.
The observer cannot know whether or not an atom of the substance has decayed, and consequently, cannot know whether the vial has been broken, the hydrocyanic acid released, and the cat killed. Since we cannot know, according to quantum law, the cat is both dead and alive, in what is called a superposition of states. It is only when we break open the box and learn the condition of the cat that the superposition is lost, and the cat becomes one or the other (dead or alive). This situation is sometimes called quantum indeterminacy or the observer's paradox: the observation or measurement itself affects an outcome, so that the outcome as such does not exist unless the measurement is made. (That is, there is no single outcome unless it is observed.)
We know that superposition actually occurs at the subatomic level, because there are observable effects of interference, in which a single particle is demonstrated to be in multiple locations simultaneously. What that fact implies about the nature of reality on the observable level (cats, for example, as opposed to electrons) is one of the stickiest areas of quantum physics. Schrödinger himself is rumored to have said, later in life, that he wished he had never met that cat.