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A cuttlebug is a diecutter and embosser. There are folders that you sandwich a piece of card stock in, run it through, and it comes out embossed. It folds up nicely so it does not take up a lot of space. I got mine with a coupon for under $50. A die cutter cuts out different shapes.
Kay
This video tutorial on the Cuttlebug from Scraptime should give you a pretty good idea of what it is and what it does: http://scraptime.ca/blogpage/?p=156