A metaclass is the class of a class. Like a class defines how an instance of the class behaves, a metaclass defines how a class behaves. A class is an instance of a metaclass.
While in Python you can use arbitrary callables for metaclasses (like Jerub shows), the more useful approach is actually to make it an actual class itself. 'type' is the usual metaclass in Python. In case you're wondering, yes, 'type' is itself a class, and it is its own type. You won't be able to recreate something like 'type' purely in Python, but Python cheats a little. To create your own metaclass in Python you really just want to subclass 'type'.
A metaclass is most commonly used as a class-factory. Like you create an instance of the class by calling the class, Python creates a new class (when it executes the 'class' statement) by calling the metaclass. Combined with the normal __init__ and __new__ methods, metaclasses therefore allow you to do 'extra things' when creating a class, like registering the new class with some registry, or even replace the class with something else entirely.
When the 'class' statement is executed, Python first executes the body of the 'class' statement as a normal block of code. The resulting namespace (a dict) holds the attributes of the class-to-be. The metaclass is determined by looking at the baseclasses of the class-to-be (metaclasses are inherited), at the __metaclass__ attribute of the class-to-be (if any) or the '__metaclass__' global variable. The metaclass is then called with the name, bases and attributes of the class to instantiate it.