Iron Dome or Kippat Barzel-(IPA-/kipat barzel/ כיפת ברזל) in Hebrew, is a mobile anti-air system used to intercept rockets and artillery fire. It was publicly anounced that it was being developed at around 2008 (Although research begun in 2005) by RAFAEL, Armament Developement Authority.
Picture of a unit:
Now, this thing is incredibly awesome. It has a computer system and it is networked.
Now how does it work?
A unit has lots of sensors and is connected to a military network which tracks rockets being launched (Mainly from the Gaza Strip), it then calculates its trajectory and depending on the location of theapproximate point of impact, it decided whether to intercept it or not. This is important as every rocket costs between 35K-40K USD and every unit costs 50M USD so you don't want to spend the tax-payers' money on it if it's not something absolutely necessary.
Most of Southern Israel is just desert and agriculture. Southern Israel is referred to as the Negev which basically is "South" in biblical language.
In the Negev there are some big cities and lots of small settlements (legal ones ;P).
Anyway, back to Kippat Barzel. This things shoots rockets down, costs shitloads of money and most importantly saves lives.
PS. When we learned about this at school it was hilarious as everyone had recently watched the Simpson's movie and we thought they were talking about a big metal dome.