How Computer Viruses Work

When you listen to the news, you hear about many different forms of electronic infection. The most common are:

• Viruses - A virus is a small piece of software that piggybacks on real programs. For example, a virus might attach itself to a program such as a spreadsheet program. Each time the spreadsheet program runs, the virus runs, too, and it has the chance to reproduce (by attaching to other programs) or wreak havoc.
• E-mail viruses - An e-mail virus travels as an attachment to e-mail messages, and usually replicates itself by automatically mailing itself to dozens of people in the victim's e-mail address book. Some e-mail viruses don't even require a double-click -- they launch when you view the infected message in the preview pane of your e-mail software [source: Johnson].
• Trojan horses - A Trojan horse is simply a computer program. The program claims to do one thing (it may claim to be a game) but instead does damage when you run it (it may erase your hard disk). Trojan horses have no way to replicate automatically.
• Worms - A worm is a small piece of software that uses computer networks and security holes to replicate itself. A copy of the worm scans the network for another machine that has a specific security hole. It copies itself to the new machine using the security hole, and then starts replicating from there, as well.

Reference: http://www.howstuffworks.com/virus.htm