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A spark gap consists of an arrangement of two conducting electrodes separated by a gap filled with some gas (usually air). When a suitable voltage is supplied, a spark forms, ionizing the gas and drastically reducing its electrical resistance. An electric current then flows until the path of ionized gas is broken. This happens usually when the voltage drops, but in some cases when the heated gas rises, stretching out and then breaking the filament of ionized gas. Usually the action of ionizing the gas is violent and disruptive, often leading to sound (ranging from a snap for a spark plug to thunder for a lightning discharge), light and heat.
Spark gaps are essential to the functioning of a number of electronic devices, and they also occur naturally.
A spark plug uses a spark gap to initiate combustion. The heat of the ionization trail ignites a fuel-air mixture inside an internal combustion engine.
A Jacob's ladder is a device for producing large sparks. The spark gap is formed by two wires, approximately vertical but gradually diverging away from each other towards the top. When a high voltage is applied, a spark forms across the bottom of the wires, lowering the voltage by applying load to the electrical power supply. The heated, ionized air rises, carrying the current path with it. As the trail of ionization gets longer, it becomes more unstable, finally breaking. Since the load is removed, the voltage rises and the spark re-forms at the bottom of the device. This cycle leads to an exotic-looking display of electric blue sparks which is often seen in movies about mad scientists.
Apart from that, it is also used in high-voltage switches, e.g. in power plants and transformer stations. Such switches are constructed with a large, remote-operated switching blade with a hinge as one contact and two leaf springs holding the other end as second contact. If the blade is opened, a spark might keep the connection between blade and spring conducting. (The spark ionizes the air, which so becomes conductant, allowing an electric arc to form and sustain ionization and hence conduction.) Here, a Jacob's ladder on top of the switch will pull the arc apart and so extinguish it.
You might also find small Jacob's ladder mounted on top of ceramic insulators of high-voltage pylons. If a spark should ever manage to jump over the insulator and give rise to an arc, it will be extinguished.
Lightning is a large spark leaping from a cloud to the earth.