A computer cookie is a small text file which contains a unique ID tag, placed on your computer by a website. The website saves a complimentary file with a matching ID tag. In this file various information can be stored, from pages visited on the site, to information voluntarily given to the site. When you revisit the site days or weeks later, the site can recognize you by matching the cookie on your computer with the counterpart in its database.

There are two types of computer cookies: temporary and permanent. Temporary cookies, also called session cookies, are stored temporarily in your browser's memory and are deleted as soon as you end the session by closing the browser. Permanent cookies, also called persistent cookies, are stored permanently on your computer's hard drive and, if deleted, will be recreated the next time you visit the sites that placed them there.

Cookie technology addressed the need to keep track of information entered at a site so that if you submitted a registration form for example, the site could associate that information with you as you traveled through the site's pages. Otherwise, every time you clicked on a different page in the site, establishing a new connection, the site would lose the information in reference to you, forcing you to re-enter it.

A temporary cookie solved this problem in the short term by setting aside a little bit of browser memory to save information. However, once the browser was closed, all temporary cookies were lost. Return surfers were not recognized and registration information had to be re-supplied at every visit.

Persistent cookies solved this problem. They allowed a site to recognize a surfer permanently by transferring a text file with a unique ID tag to the visitor's hard disk, matching a file on the server. On subsequent visits, the browser automatically handed this cookie over, allowing the site to pull up their matching cookie. Now cookies could persist for years.

Both temporary and permanent computer cookies can be used for many helpful purposes. Automatic registration logon, preserving website preferences, and saving items to a shopping cart are all examples of cookies put to good use. But permanent cookies also resulted in unanticipated uses, such as Web profiling.

Websites began keeping track of the surfing habits of its visitors, using computer cookies to log when an individual visited, what pages were viewed, and how long the visitor stayed. If he or she returned at a later date, the visitor’s cookie triggered open the log of previous visits and was amended to include the new visit. If personal information was offered on any of these visits, name, address and other information was associated with the "anonymous" ID tag, and consequently, the entire profile.

Marketers developed an even greater advantage for cookie profiling. Having advertising rights on several hundred and even many thousands of the most popular websites, marketers could pass third-party cookies to surfers and subsequently recognize individuals as they traveled across the Web, from site to site, logging comprehensive profiles of people's surfing habits over a period of months and even years. Sophisticated profiling programs quickly sort information provided by computer cookies, categorizing targets in several different areas based on statistical data. Gender, race, age, income level, political leanings, religious affiliation, physical location, marital status, children, pets and even sexual orientation can all be determined with varying degrees of accuracy through cookie profiling. Much depends on how much a person surfs, and where he or she chooses to go online.

As a result of public outcry in response to surreptitious profiling, cookie controls were placed in post 3.x browsers to allow users to turn cookies off — options that were not available in 1995 when permanent cookie technology was first embedded into browsers without public awareness or knowledge of how they could be used. Cookie controls also allow user-created lists for exceptions, so that one can turn cookies off, for example, but exempt sites where computer cookies are put to a useful purpose. Third-party cookies often have their own controls, as they are normally tracking cookies placed by marketers. Cookie contents are encrypted and are only readable by the site that placed them.