Computer products go through extensive testing before they can be released to the unsuspecting and trusting public. When a product has passed the in-house testing stage (see alpha testing), it goes into beta testing, often just called beta. Beta versions of the product are sent out for beta testing to "normal" people who don't work for the company. (These people are then, logically, called beta testers or beta sites.) The beta testers work with the software or hardware in real-life situations and report back the things that go wrong or that need improvement.
Usually, the software company sends out several beta versions during the development process. The first one often has lots of bugs, and some of the features may not work at all. But at least it gets the ball rolling, so the developers can get feedback on the product design from people in the outside world. Based on this feedback, the developers may decide to revise the way the program looks and works. The next beta version should have fewer bugs, and look more like the final version. The beta testers are supposed to try every feature to find anything that doesn't work right. Based on their reports, the programmers find and fix the problems.
Ideally, this process repeats itself a time or two more, until someone decides all the bugs have been found and everyone's pretty happy about the way the program works. The sad truth: A few bugs always remain, even after beta testing. Sadder yet: Products with known bugs are sometimes released commercially, just to get the product out on the market on schedule.