LEDs, short for Light Emitting Diodes, are tiny semiconductor chips that generate light when electrified. It takes a small amount of electricity to make an LED glow (emit electrons), and the elements that the diode is made from determine the light spectrum it emits. An LED is backed by an internal reflector and encased in an epoxy body with an integrated lens. Together, these components determine the angle of the light emitted by the diode, which is shaped as a downward-facing cone. Individual LEDs produce relatively small light cones, so they are clustered into arrays so the light cones overlap, increasing light intensity and coverage area.
LEDs have been around since the 1960s (think displays on alarm clocks or battery levels of video cameras), and greens and tech analysts have long predicted that the durable, cool-to-the-touch technology promises the future. But until recently the hardware has not been quite up to the task of producing high brightness at a reasonable cost.
The Department of Energy has estimated that LEDs could reduce national energy consumption for lighting by 29% by 2025. That would save U.S. households $125 billion on their electric bills.
For more technical aspects of LED technology please visit Wikipedia's LED page
For an example of common electricity savings using LED lights please see the Energy Savings Calculation below