Folding@Home is a project of Stanford University, studying protein folding. The way in which proteins are folded three-dimensionally is crucial to their function. Many mutations that lead to disease are in fact a replacement of one amino acid in the protein by one of such a different size or shape that the protein can’t adapt to the correct three-dimensional structure. Likewise, there are also mutations that don’t really have any dramatic effects if an amino acid is replaced by a somewhat similar one. And there is the case of silent mutations, where the amino acid doesn’t change at all.
Protein folding can be studied quite well by computer modeling. You have to remember that proteins are so tiny that their individual amino acids are invisible to even the best microscopes, but computer models have proved to be successful in predicting biological effects. The more often computer models are used, the better they get at predicting the actual biological situation.
The big disadvantage of hardcore modeling is that it takes a lot of computer power. And this is where you can help! Folding @ Home distributes software which you can run on your own computer, in the background, providing the researchers with the computer power they need to carry out their calculations.
This concept is similar to the SETI project at Berkeley, in which you can donate computer power to the search for extraterrestrial intelligence.