What are wavelets? Where can I get more information?
In short, wavelets are a way to analyze a signal using base functions which are localized both in time (as diracs, but unlike sine waves), and in frequency (as sine waves, but unlike diracs). They can be used for efficient numerical algorithms and many DSP or compression applications. The mathematical theory behind wavelets (and other related transforms) is given in the appendix of the XWPL reference manual.