Powershell V2.0 is the current latest realease [Dec 2011], installed by default on Windows 7 and Windows Server 2008 R2; and also available for download for earlier versions of Windows both 32bit and 64bit platforms.
On Windows 7, click the Start icon, All Programs, Accessories, “Windows PowerShell” folder
or Winkey+R type Powershell and enter
Windows Powershell is basically a CLI [Command Line Interface] like cmd but much more advanced
So Powershell is a task automation framework, cosisting of a command-line shell and associated scripting language built on top of, and integrated with the .NET Framework. PowerShell provides full access to COM and WMI, enabling administrators to perform administrative tasks on both local and remote Windows systems.
In PowerShell, administrative tasks are generally performed by cmdlets (pronounced command-lets), specialized .NET classes implementing a particular operation. Sets of cmdlets may be combined together in scripts, executables (which are standalone applications), or by instantiating regular .NET classes (or WMI/COM Objects). These work by accessing data in different data stores, like the filesystem or registry, which are made available to the PowerShell runtime via Windows PowerShell providers.
Windows PowerShell also provides a hosting mechanism with which the Windows PowerShell runtime can be embedded inside other applications. These applications then leverage Windows PowerShell functionality to implement certain operations, including those exposed via the graphical interface. This capability has been utilized by Microsoft Exchange Server 2007 to expose its management functionality as PowerShell cmdlets and providers and implement the graphical management tools as PowerShell hosts which invoke the necessary cmdlets. Other Microsoft applications including Microsoft SQL Server 2008 also expose their management interface via PowerShell cmdlets. With PowerShell, graphical interface-based management applications on Windows are layered on top of Windows PowerShell. A PowerShell scripting interface for Windows products is mandated by the Common Engineering Criteria.