The initials GMO stand for Genetically Modified Organism and yes, this concept is as frightening as it sounds. Basically, a GMO is a plant or animal that has been created in a laboratory. They are Frankenstein creatures that have never occurred in nature, their inner workings have been genetically engineered and manipulated with the DNA of other plants, animals, viruses and bacteria. To be clear, a GMO isn't some herbicide that is sprayed or antibiotic that is injected to a previously existing species. GMOs are the plants and animals themselves.
So your first question would be why on earth have these GMOs come into existence? What are the reasons behind their creation? There are two primary reasons. For the purposes of clarity, let's focus on plants:
1. A seed producer will tinker with their seed to make it resistant to their own particular herbicide.
2. A seed producer will modify their products to contain built-in pesticides.
Now let's consider these two 'advantages', shall we?
In the first case, we have the widespread use of weedkillers that will wipe out all undesirable plant-life that might negatively affect the crop, as well as the crop in question if it has not been modified. The seeds have to be engineered to withstand what they naturally can not. The obvious corollary to this enhanced defense is that other types of naturally occurring crops will be killed off when the herbicide is implemented whether these be indigenous or, let's say, a competitor seed producer's crop that just so doesn't happen to have this particularly leg-up.
The second reason is much easier to explain. Some of these plants now grow with the pesticide right there inside of them. It is part of their DNA. In many cases it is far too early to know just how these genetically modified plants effect the animals that consume them.
40 countries including Japan, Australia, Brazil, Mexico and all of the European Union have placed significant restrictions or outright bans on GMOs due to the the fact that they have never been proven safe for human consumption. The United States and Canada do not have any requirements for even labeling food that has been genetically modified.
For more information on GMOs, here is a helpful infographic created by Nature's Path:

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