Bluetooth is a wireless technology designed for short range communication between compatible devices. The Linux kernel includes the BlueZ Bluetooth stack.
Bluetooth is a wireless technology standard for exchanging data over short distances (using short-wavelength microwave transmissions in the ISM band from 2400–2480 MHz) from fixed and mobile devices.
In simple: data can be transferred between bluetooth devices in a short ranges. eg laptops, computer having bluetooth dongle, mobiles, PDA etc.