Cookies are small data packets that contain information about your Web-surfing habits, which are then made available to cookie-savvy sites on the Internet.
The main use of cookies is to track demographics for advertising agencies that want to see just what kinds of consumers a certain site is attracting.
Some web sites also use cookies to keep your account information up-to-date. That way, when you enter a site where you have an account, Amazon.com for instance, the site knows immediately who you are and loads your personal preferences. This also how sites like Yahoo! offer "myYahoo!" personalisation features.
Companies like Double-Click and NetGravity use cookies to compile information about Web surfers, which in turn is used by advertising clients to deliver targeted ads. You can see a prime example of this strategy at the popular search engine Yahoo!, which displays a seemingly random banner ad when you first contact the site.
After you've entered a word search, for example "books for sale," the banner ad suddenly starts touting Amazon.com.
