Krausen is the foamy and bubbly head that forms on top of beer during primary fermentation. As yeast ferments the sugars in a beer, it creates a great deal of CO2. The Krausen is formed as the CO2 rises to the top of the beer, mixing with proteins, yeast and residues and forming a tall layer of yeast saturated bubbles.
Krausening is also a term for when a measured amount of actively fermenting beer and/or krausen is added to a more thoroughly fermented beer as a means of conditioning or naturally carbonating the beer. Krausening is typically done as a means of carbonating a bottled beer with out violating the German beer purity laws.
Below is a video showing krausen in a 6.5 gallon carboy during primary fermentation.
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