This article from MIT's Technology Review contains animated explanation of RFID.

"Radio frequency identification technology is finally coming into its own. Wal-Mart, the nation’s largest retailer, has asked suppliers to attach RFID tags to product shipment pallets by 2005 to automate tracking. EPCGlobal, an international organization helping to drive and implement the technology, is building a network in which every consumer item will have a tag and an electronic product code, or EPC. But drawbacks to RFID technology, including its high cost and concerns about consumer privacy, must be overcome before it finds widespread use. Here’s how tracking with RFID tags is expected to work in the supply chain."

This is a technology you'll be hearing a lot about over the next few years. It goes beyond just tagging shirts for sale. Some have proposed putting RFID tags on school kids and the elderly so that their whereabouts will always be known. Will we as a society decide that the potential threat to privacy is outweighed by the economic and practical benefits?