This is the description I also post over at Wikipedia, but I consider this the master copy.
It will be kept more up to date than the one at Wikipedia.
---Intro to DSL---
Damn Small Linux (also known as DSL) is a Linux distribution for the x86 architecture, originally in a Bootable business card LiveCD format, it is now also capable of being installed to and run from the hard disk, a USB flash drive, a Compact Flash card, inside a Microsoft Windows or Linux host environment via Qemu, a ZIP drive, and just about any other bootable media that can contain the required 50MB. Although the DSL project has maintained its 50mb size limit, it still includes many essential desktop applications. Damn Small Linux was originally conceived and maintained by John Andrews, but has grown into a large community project with many contributors, most notably Robert Shingledecker for the creation of the MyDSL system, DSL Control Panel, and tons of other stuff.
---Origins---
Although John based DSL originally on Model_K, a 22mb hack-down of Knoppix, DSL is now based on Knoppix proper, allowing much easier remastering and improvements.
---What can fit in 50 megabytes?!---
Now in its 9th iteration (0.9.2), Damn Small Linux has a complete desktop, including: XMMS, FTP client (both graphical and command line) and server, Mozilla Firefox web browser, Dillo web browser, Links-hacked web browser, Siag Office (Pathetic Writer word processor and the Siag spreadsheet), Sylpheed email, spellcheck (US English), some editors (Beaver, Vim, Nano), graphics editing and viewing (Xpaint, and xzgv), Xpdf, emelFM (file manager), Naim (AIM, ICQ, IRC), VNCviewer, Rdesktop, SSH/SCP server and client, DHCP client, PPP, PPPoE (ADSL), Monkey web server, calculator, generic and GhostScript printer support, Network File System, games, system monitoring apps, a host of command line tools, USB support, and PCMCIA support. DSL has built in scripts for the download and installation of Debian's Advanced Packaging Tool a.k.a Apt, and Synaptic, the gui for Apt. Additionally Damn Small Linux provides on-demand download for large programs such as OpenOffice.org and the Gcc as well as smaller apps like Xchat by means of the MyDSL system, which allows users the convenience of 1 click download and installation of apps (although most DSL users refer to all things MyDSL as extensions). As of December 7, 2004, the MyDSL servers are hosting over 200 apps, plugins, and other extensions available for installation.
---The MyDSL System, or Stuffing the Penguin---
The MyDSL extensions and servers are handled and maintained by the enigmatic Ke4nt and hosted by many kind organizations, such as Ibiblio and Belgium's Belnet. There are 2 areas of the MyDSL servers - regular and testing. The "regular" area contains extensions that have been proven stable enough for everyday use and is broken down into different areas such as "Apps", "Net", "system", and "uci" (Universal Compressed ISO - extensions in .uci format mount as a separate filesystem to save RAM space). The Testing Area is for newly submitted extensions that theoretically work "as advertised", but may have any number of bugs.