This is alcohol that's been heavily flavored with herbs, peels, bark, spices, and bitter-tasting roots. Many brands were developed in the 1800s as elixirs that were supposed to cure indigestion, jaundice, and a variety of other ailments. Due to these "medicinal" properties, bitters allowed drinkers to avoid both liquor taxes and social stigma. The FDA put a stop to the medicinal claims in the early 1900s, and bitters quickly fell out of favor, except for a brief comeback during Prohibition.
Today, bitters are used to flavor cocktails, coffee, and various dishes. Don't add more than a dash or two--bitters can easily overpower other flavors.
Bitter spirits are also called bitters, but they're not as intensely flavored.
To get substitutions for bitters in general, click here.