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Spyware is often associated with software that displays advertisements (called adware) or software that tracks personal or sensitive information. That does not mean all software which provides ads or tracks your online activities is bad. For example, you might sign up for a free music service, but "pay" for the service by agreeing to receive targeted ads. If you understand the terms and agree to them, you may have decided that it is a fair tradeoff. You might also agree to let the company track your online activities to determine which ads to show you.
Other kinds of unwanted software will make changes to your computer that can be annoying and can cause your computer to slow down or crash. These programs have the ability to change your Web browser's home page or search page, or add additional components to your browser you don't need or want. These programs also make it very difficult for you to change your settings back to the way you originally had them. These types of unwanted programs are also often called spyware.
The key in all cases is whether or not you (or someone who uses your computer) understands what the software will do and have agreed to install the software on your computer.
There are a number of ways spyware or other unwanted software can get on your system. A common trick is to covertly install the software during the installation of other software you do want, such as a music or video file sharing program. Whenever you install something on your computer, make sure you carefully read all disclosures, including the license agreement and privacy statement. Sometimes the inclusion of unwanted software in a given software installation is documented, but it may appear at the end of a license agreement or privacy statement. | 