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Deism is a belief that God created the Universe, but left everything else to its own devices. Some views differ in specifics. Many deists believe that the Big Bang was initiated by a god (of their choice), and that everything that happened since is the consequence of scientific laws "created" at the same time. In other cases, deism implies that said God set in motion all the events needed to make life on Earth inevitable - and thus is still responsible. Deistic beliefs tend to differ from usual religion by the fact that the creator god is either not worthy of worship, or worship is completely unnecessary. This gives deism a greater overlap with atheism and freethought compared to religion.
 The rise of Deism
Deism arose and came to its most prominent during the philosophical change of the Enlightenment. As scientific knowledge increased, a climate of greater religious freedom developed in Europe and inconsistencies in the Bible were more freely discussed. A result of this process was an increasing belief that the universe followed naturalistic principles and God's active intervention (and by extension, traditional religious praxis like prayer, priests and scripture) was not necessary.
 The Age of Reason
The classic text for Deism is probably Thomas Paine's work The Age of Reason, where he states:
I believe in one God, and no more; and I hope for happiness beyond this life.
I believe in the equality of man; and I believe that religious duties consist in doing justice, loving mercy, and endeavouring to make our fellow-creatures happy.
But, lest it should be supposed that I believe many other things in addition to these, I shall, in the progress of this work, declare the things I do not believe, and my reasons for not believing them.
I do not believe in the creed professed by the Jewish Church, by the Roman Church, by the Greek Church, by the Turkish Church, by the Protestant Church, nor by any church that I know of. My own mind is my own church.
All national institutions of churches, whether Jewish, Christian or Turkish, appear to me no other than human inventions, set up to terrify and enslave mankind, and monopolize power and profit.
I do not mean by this declaration to condemn those who believe otherwise; they have the same right to their belief as I have to mine. But it is necessary to the happiness of man that he be mentally faithful to himself. Infidelity does not consist in believing, or in disbelieving; it consists in professing to believe what he does not believe. 
 Deistic beliefs
An analogy frequently used for the Deist God is a watchmaker - the watchmaker assembles the pieces, and winds up the mechanism, but then just lets the watch run without interfering in it.
So, why did Deists believe in God at all? Partly because they were raised in a Christian milieu; partly because they thought of God as a natural focus and director of a seemingly rational, ordered universe. An argument from first cause thus seemed more plausible than it does in the light of modern science, which is now describing a universe that is more random and unpredictable than classical Deism might have suspected.
 Differences between deism and Christianity
The Deist God is quite different to the God of traditional Abrahamic religions - it has no personality, for example, and does not communicate with humans - and deists tend to see God as an abstract logical principle rather than an anthropomorphic being with wants and desires and a burning urge to control what we do with our pants off.
Rather than believe the Bible to be the word of God, Deists generally view the Old Testament as (at best) a historical novel with added supernatural trappings, and the New Testament as a straight religious screed. They view Jesus and Paul as philosophers, with no special trappings from an Almighty.
Unlike members of major revealed religions, many Deists do not worship God, as they see no evidence that God (whatever form it takes) even wants to be worshiped. Deists who still wish to enjoy the trappings of church services will often attend Unitarian Universalist congregations, where lack of belief in the Bible is not generally stigmatized.
 Differences between deism and atheism
Deism holds a lot more common ground with Atheism than it does with Abrahamic religions. Both hold the Bible and other religious works to be written mostly as human political works instead of being the holy word of any god. Both positions believe in naturalistic explanations for just about every phenomenon around them rather than trying to use "goddidit" to explain everything.
In fact, the only real difference lies in their explanation for the origins of time and space. Deists claim that a god created the universe and its rules, but did (and does) nothing else. Atheism simply takes this one step further by denying any existence, and therefore involvement of any 'god' at all, in the beginnings of the universe or otherwise; in this way, deists can be thought of as atheists in everyday practicality.
 Famous deists and deism today
Deism gradually declined due partly to the publication of Darwin's The Origin of Species, which finally gave a complete version of the universe that did not necessarily involve any supernatural forces, and because it was always (and remains today) much more of a personal philosophy than an organized religious movement.
Deism still exists, but in a form distinct to the "classical" deism of the Enlightenment which was philosophically closer to present-day atheism.