The placeholder attribute places text inside the input in a light gray color. The text remains whenever the input has no value. As soon as the input takes on value (from typing or any other means), the placeholder text is removed.
The spec says placeholder should only work on text, url, tel, email, and password input types. Safari 4/5/iOS4 incorrectly supported it on numbers and dates. Firefox 4 incorrectly supported it on numbers.
Safari 4 and Opera 11.10 supported it on inputs but not textareas.
Placeholders should be treated like a "hint." They are not a replacement for labels (accessibility) or titles (longer advisory text).
As of Safari 5.2 and Chrome 17, the placeholder text stays visible until a value has been entered, instead of disappearing on focus. Older versions would remove the placeholder text when the field came into focus (rather bad UX, since when the field first comes into focus is when the user needs the "hint" the most).