Blue moons are full moons that aren't timed to the regular monthly pattern. Each calendar year has roughly 11 more days than the lunar year. These days add up until there is an extra full moon that year. It happens every 2-3 years. As for why this was named the Blue moon I'm not too sure.
I was reading somewhere that this current definition of what a "blue moon" is fairly new, though the term has been around for much longer.
I read (if memory serves) that the current definition stems from an attempt by an astronomer writing in an astronomy magazine to summarize and clarify the definition given in the Farmer's Almanac which was, apparently quite obtuse involving the exact date of the beginning of Lent and Easter (or something along those lines).