A rack and pinion is a pair of gears which convert rotational motion into linear motion. The circular pinion engages teeth on a flat bar - the rack. Rotational motion applied to the pinion (by the steering wheel) will cause the rack to move to one side or the other, right up to the limit of its travel.
The rack and pinion arrangement is commonly found in the steering mechanism of cars or other wheeled, steered vehicles. This arrangement provides a lesser mechanical advantage than other mechanisms such as recirculating ball, but much less backlash and greater feedback, or steering "feel".
If you guessed that rack and pinion steering is used on race cars, you'd be correct. Use the links below to see some diagrams. A picture is definitely worth a thousand words in this case.