Agile development is an umbrella term for a number of different methods of developing software. Such methods include XP, Crystal, DSDM and scrum. Individually all these methods are different in their approach but they share the fundamental issue of continuous feedback. This allows a very dynamic approach to software development.
It also allows the customer, the one funding the project to be involved in vital stages of the development. This is important because only the customer can really tell how useful a Information System is. It needs to be built to accommodate their needs.