What does "obvious to one skilled in the art" mean?

Obviousness is a very difficult concept to grasp - many patent examiners and many attorneys/agents do not even truly appreciate.
Basically, it is where the examiner cites a particular patent which has all of the features disclosed in it except maybe for one feature that you are claiming - he then has another patent that discloses your feature, so the question becomes whether it is obvious to take that feature from the second patent and to effectively insert it into the first patent so as to meet all of the limitations of your claims. So, in patent terms, the question becomes "Is it obvious to one of ordinary skill in the art" to combine the "teachings" of the references. A very simplistic example would be let's say you are the first inventor of a nail and you use it to hang a picture on a wall or to secure one piece of wood to another, and you get a patent for the nail as a fastener. Someone else comes along and invents the screw - some would argue that the first patent would anticipate or render obvious your screw because the nail and screw are both fasteners and used for similar purposes. The attorney/agent for the screw application would argue that they the screw is an unobvious improvement over the nail because the screw can secure the two pieces of wood together with great force and pull-out resistance and therefore the application for the screw should be granted a patent.