An expert is someone who has an extraordinary amount of knowledge within a narrow domain.

What is it?
Expert definition: Expert System is a SOFTWARE SYSTEM that support decision by providing managers with access to computerized expert knowledge based on a knowledge-based system.
Everyone understanding definition (somewhat): Expert system is a SOFTWARE SYSTEM designed to replicate the decision-making process of a human expert.

How does it works?
It guide users through complex decision-making processes using interactive, intelligent question and answer sessions.
Example:
If (1) the infection is primary bacteremia, and (2) the site of the culture is one of the sterile sites, and (3) the suspected portal of entry of the organism is the gastrointestinal tract, then there is suggestive evidence (0.7) that the identity of the organism is bacteriodes.

Example of how it is used in the "real world"
First expert system is developed around medical knowledge bases because medical knowledge is orderly and well documented and could be captured successfully in knowledge base.
MYCIN - first medical expert system outperformed many human experts in diagnosing diseases
XCON - one of the most successful expert system in commercial use today, it have the knowledge base of more than 10,000 rules describing the relationship of various computer part. It does the work of more than 300 human experts and make fewer mistakes than human do
American Express - use expert system to automate the process of checking for fraud and misueses of its no-limit credit card
Blue Cross/Blue Shield - expert system automates insurance claim processing, handles up to 200 routine claims each day, and allows human clerks to spend more time on tough situations that requre human judgement
Boeing Company - use expert system to locate the right parts, tools, and techniques for assembling airplane electrical connectors, it reduce the average search time from 42 to 5 minutes

Advantages
Take care of routine tasks so workers can focus on other tasks that expert system cannot do, such as judgement
Reduce time and cost, human errors
Help train new employees
Provide expertise when no experts are available
Preserve the knowledge of experts after those experts leave an organization
Combine knowledge of several experts
Make knowledge available to more people

Disadvantages
Difficult to built, many software companies sell expert system shells, generic expert system containing human interfaces and inference engines, but no knowledge base
Poor at planning strategies
Lack of flexibility make them less creative than human thinkers
Powerless outside of their narrow, deep domains of knowledge
Not always accurate

Social/Ethical Implications
Reliability - lack of accuracy
Policies and standards
When expert systems make decisions, who is responsible?
If a doctor uses an expert system to decide to perform surger and the surgery fails, who is liable - the doctor, the programmer, the software company, etc
If you are denied medical benefits because of a bug in an expert system, do you sue the person, an organization, or the program?
If a power plant explodes because an expert system fails to detect a fault, who is to blame?
As expert systems proliferate, questions like these are certain to confront consumers, lawyers, lawmakers, and technicians.

Sources
Computer Confluence