Beta, named after the second letter of the Greek alphabet, is the software development phase following alpha. It generally begins when the software is feature complete. Software in the beta phase will generally have many more bugs in it than completed software, as well as speed/performance issues and may still cause crashes or data loss. The process of delivering a beta version to the users is called beta release and this is typically the first time that the software is available outside of the organization that developed it.
Open betas serve the dual purpose of demonstrating a product to potential consumers, and testing among an extremely wide user base likely to bring to light obscure errors that a much smaller testing team might not find.