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 In simplest terms a Hybrid Vehicle is a vehicle that uses a combination of an engine and electric motor powered by a rechargeable battery, to move a vehicle and/or to power other functions in the vehicle. Different variations of the technology have been developed by different manufacturers.
The engine component of a hybrid can either be an internal combustion engine using fuels such as gasoline, diesel, ethanol, biodiesel, propane or natural gas, or it can be a fuel cell which uses hydrogen.  In all hybrids a rechargeable battery connected to an electric motor characterizes the "hybrid" nature of the vehicle. The battery in a hybrid is recharged either from the engine or from energy captured while braking, or both. To date, most hybrids have used small capacity NiMH (Nickel Metal Hydride) batteries which only allows a hybrid to drive in an all electric mode for a very short distance.
A new technical approach is the plug-in hybrid. This type of hybrid is characterized by a very large capacity Lithium Ion battery, is recharged principally by plugging the vehicle into the electrical grid, and can travel in an all electric mode for up to 60 kilometres on a single charge. Some product designs are similar to a conventional hybrid with an integrated conventional engine and mechanical transmission while other designs like the Chevrolet Volt are really almost a pure electric vehicle with a small engine that is only used to recharge the battery.
For more technical information please see:
How Stuff Works: Introduction to Hybrid Cars
Series vs. Parallel Drive Train Systems
Most hybrids use a combination of mechanical and electrical power to move a vehicle. These two systems work together to deliver energy to the wheels. Manufacturers are using two different design approaches, either a Parallel and Series system.
Parallel Hybrid: In a parallel system the battery and engine are both connected to the transmission. As a result either the battery via the electric motor, or the engine directly to the transmission, or a combination of both, can provide propulsion power.
Source:Toyota
Series Hybrid: In the series type of hybrid the engine turns a generator and the generator can either charge the batteries or power an electric motor that drives the transmission. The engine never powers the vehicle directly.
Source:Toyota
Series/Parallel Hybrid: The Series/Parallel system combines both the Series and Parallel systems. The system has a power diverter which can direct the energy from the engine to the wheels or to the generator. This means that depending on the situation the engine can provide propulsion to the wheels or energy to the battery.
Source: Toyota
Note: Manufacturers have chosen a particular hybrid architecture because they believe that it will deliver superior performance, reliability, and operational compatibility. In terms of performance, all hybrids have shown that they have the potential to reduce fuel consumption and emissions.
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