This funny-sounding computer term has two widely different definitions that are completely unrelated:
1. A security key. This is a little hardware device that plugs into the serial or USB port of a computer. Its purpose is to ensure that only authorized users can use certain software applications. If you have never seen a dongle, don't be surprised. They are only used with expensive, high-end software programs that most people have never heard of, much less use. When a program that comes with a dongle runs, it checks the dongle for verification as it is loading. If it doesn't find the dongle, the computer explodes. Well, not really -- usually the program just quits. If more than one application requires a dongle, multiple dongles using the same port can be daisy-chained together. Basically, if you ever find yourself daisy-chaining multiple dongles together, you must be doing pretty well in life.
2. A laptop Ethernet card adapter. This is a little connector that attaches to a PC card in a laptop on one end, and to an Ethernet cable on the other end. Since most PC (or PCMCIA) network interface cards are too small to connect directly to a standard RJ-45 Ethernet cable, they need this little adapter that connects the card to the cable. (3Com cards that use an "X-Jack" connector do not need a dongle.) As far as why the name dongle is used, I have no idea.