An icon is a symbolic representation of something else -- a metaphor for something real, displayed using far less information (detail) than the original.
Icons certainly existed before Apple. Though before Apple they were usually used as buttons or symbols, not usually as Objects (that you could manipulate and work with). In 1983 icons changed substantially with the Lisa and later the MacOS. Apple used icons, and popularized them (and GUI's) on computers, and they used icons as nouns (objects) instead of verbs (actions).
Because of the screen size, Apple created 32 x 32 pixel icons for normal use. These were roughly 1/2" squared, and had enough detail to be expressive -- but were very 'iconic' (low detail and symbolic). But they were often far more expressive that the same amount of text in the same space.
Apple also had smaller icons (16 x 16), or 1/4" squared, for using in lists... and an even smaller icon (12 x 12) that was so small it couldn't have any detail information, and just show "type" of the object.
Apple created a visual language for Icons created to support them. A hand or a diamond shaped Icon was an Application, rectangle with folded corner was a document and so on. This not only helped icons be more universal (and apply to people of many languages and literacy levels), but it allowed icons to become a simple form of communication (a language) of their own.
Apple also figured out a very neat way to bundle icons together, so that you can have different sizes of icons and different depths of icons bound together in a "family". Depth means different color depths, so that you could have black and white icons, 16 color, 256 color icons, and so on, all being the same icon -- and the system automatically displayed the correct versions depending on the depth (colors supported) by your display. All this information was bound together in the resource fork of a file, and was very easy to alter and modify.
All this was very innovative and hadn't been done before.
When NeXT broke away from Apple, they decided to create a powerful Object Oriented Operating System targeted at Universities, Research and some Corporations. It was powerful and UNIX based, and had a far larger screen (and more resolution) than the Original Mac. NeXT also realized that resolutions of monitors were going to go higher and higher. Because of this they were willing to trade off size (resolution) for more detail and information on their icons.
Because there was much more screen real-estate to use, NeXT used that and created 48 x 48 pixel icons (as well as 64 x 64 pixel icons for some things). These high resolution icons were beautiful and allowed far more expression than 32 x 32 icons used by Apple. It was a very nice improvement in some ways -- and not a good one in others.
The larger icons meant that you could fit far fewer of them on the screen, and they take up a lot of room (both memory and screen real-estate). On a NeXT station, that had more memory and larger screens, this wasn't much of an issue on a NeXT station -- but it was not ready to mainstream at the time (since the average screen didn't have as much resolution as NeXT cubes).
Where the problem comes in is that there is so much more information to describe an object, that people just use pictures instead of illustrations or ideas. The Macs had a visual language used for icons. NeXT didn't have as expressive a visual language to describe what an Icon would be by it's shape or the "extras" around the object. The larger icons were less "iconic" representations, and more small pictures of what the item was supposed to be. So the detail and resolutions allowed this.
The problem is that this gets into an Interface Philosophical war -- because a simulated object / behavior (metaphor) is better than a "real" object. For example, if you have a picture of a house that is really a little photo, it has lots of erroneous detail. It may convey the message of a Tutor House, a White House (with brown trim), it may look a little like a church or lodge. Lots of the detail is not only unneeded, but confusing or conflicting. So what are you trying to represent? A simple iconic representation of a house may get the message across better without the extra information.
OS X Client is going to combine the Mac Icons with far larger and more informative NeXT like ones -- and then they go way beyond. While NeXT had 48 x 48 pixel icons, the new Mac Icons (called "Previews") are 128 x 128 pixels. These super icons allow for algorithmic scaling to any size (64 x 64, 56 x 56, 48 x 48, 32 x 32). This allows for previewing of information in far more detail. In fact imagine a preview (Super Icon) that actually looks like your picture in the Finder. There is just a lot more information in these larger images -- and that can come in handy even when it isn't always used... oh, and they look spectacular.
These icons also have many other capabilities being added. They have an 8 bit alpha channel to allow for 256 levels of transparency (for smooth blending) -- and they look like little photographs or 3D models.
They have many variants to handle actions including:
To describe what these icons look like does not do them justice -- imagine little scans, or 3D models. They look fantastic and there were many little samples shown. Apple demonstrated things like having an Icon that has a shadow that casts over other icons (or blends with them), or they had a magnifying glass icon with a translucency that when you place over other icons lets you see through to the other objects, and so on.
The new icons will have a huge amount of potential for the future of the Mac User Experience -- but there are still a lot of questions to be answered. There needs to be a rich language defined for what these Previews (Icons) should look like. How photorealistic do you get? What does the shape of an object mean? How is it going to handle badging (little sub-icons that are overlayed onto an icon to tell you more -- like aliases that have a little arrow, and so on). Apple hasn't explained everything just yet -- and I got the impression because they aren't finished with all that definition, or they may not want to give away too much too soon. Still, the Mac is great because of the rich UI standards -- and we need more of those standards, not less. Features without definition can be dangerous. We've gotten a peek at the features potential and there is a lot of potential there -- let's just hope the definition and standards come with them. But I trust that Apple will do the right thing, and extend the interface standards in great new directions -- and these new Icons can make for a far better (updated) Mac User Experience! Icons have always been more than just little pictures -- and now with the New Icons (Previews) they can be a lot more!