What Is Firewire and How Does It Work?
Firewire has many names. Apple refer to it as Firewire. Sony call it iLink and it's official (somewhat more boring) name is IEEE1394. The IEEE part of that stands for the Institute of Electrical and Electronics Engineers.
Firewire itself is a super fast serial interface that has replaced SCSI (Small Computer Systems Interface) on Macs and PCs as a whole. It's much easier to setup and far cheaper to produce than the previously costly and somewhat awkward (in terms of cabling and termination) SCSI interface plus Firewire can interconnect up to 63 separate peripherals at high speeds.
The vast majority of modern computers and camcorders have Firewire as standard now. For those that don't it can always be added in later on in the form of an expansion card. Firewire is especially popular with audio/video enthusiasts and has found a real niche with data backup devices because of its very high and very sustainable data transfter rates.
The difference between Firewire and USB 2.0 is the same comparison made with E-IDE and SCSI years ago. Both are perfectly functional but SCSI was always faster. The same is true of Firewire - if you want the highest possible data transfer rates in a data backup device then get the Firewire model. That being said USB 2.0 is much, much more popular as a basic interface for external backup devices. Go figure eh?