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Linux is an operating system like Microsoft Windows and Mac OS X. Unlike Windows and OS X it is free.
Now another common mistake is to use the phrase I have in my first sentence. Linux is NOT the name of the operating system. Linux is really the name of what is called the Kernel which lies at the heart of many types of free operating systems. The Linux name given to all these operating systems is a convenient way to refer to a system which uses the Linux Kernel. Those of you familiar with the Unix type operating systems will be more at home with Linux Kernel based operating systems but having said that, in the graphics desktop environment, you can experience a Windows style desktop,
an OS X style desktop or any other style desktop you wish as the two most commonly used Linux based graphics desktop environments, GNOME and KDE, are completely configurable to your own preferred style or use. I use the word free above in the context of "free to use" and yes "free to modify" but, free to modify comes with some provisos. Under the GNU license which the Linux Kernel adheres to, if you modify a copy of the Linux Kernel, you must make this available to anyone else. The thought being that others may benefit from your modifications and they in turn may do the same and offer a continuation of improvements that will benefit the whole Linux community.
Well that's the basis of Linux. It's not an operating system on it's own but forms the first building block on which GNU based operating systems are based. Here is just a sample list of these type of operating systems, also referred to as distributions or distros: Ubuntu, Fedora, Mint, openSUSE, Mandriva, Debian, PCLinuxOS, Puppy, Sabayon, Arch, CentOS, Slackware, MEPIS, Tiny Core, FreeBSD, Kubuntu, Zenwalk, Vector, PC-BSD, Damn Small, Gentoo, KNOPPIX.