“Ruby on Rails” is catchy but confusing. Is Rails some magical drug that Ruby is on? (Depending on who you ask, yes.)
Ruby is a programming language, similar to Python and Perl. It is dynamically typed (no need for “int i”), interpreted, and can be modified at runtime (such as adding new methods to classes). It has dozens of shortcuts that make it very clean; methods are rarely over ten lines. It has good RegEx support and works well for shell scripting.
Rail is a gem or a Ruby library. Some gems let you use the Win32 API. Others handle networking. Rails help make web applications, providing classes for saving to the database, processing URLs and displaying HTML (along with a web server, maintenance tasks, a debugging console and much more).
IRB is the interactive Ruby console (type “irb” to use). Rails have a special IRBconsole to access your web app as it is running (excellent for live debugging).
Rake is Ruby’s version of Make. Define and execute maintenance tasks like setting up databases, reloading data, backing up, or even deploying an app to your website.
Erb is embedded Ruby, which is like PHP. It lets you mix Ruby with HTML