A Trojan Horse is code hidden in a program such as a game or spreadsheet that looks safe to run but has hidden side effects.
When the program is run, it seems to function as the user expects, but in actuality it is destroying, damaging, or altering information in the background.
Trojan Horse is a program on its own and doesn't require a host program in which to embed itself.
Generally, Trojan Horses spread through e-mail and exchange of disks and information between computers.
Worms could also spread Trojan Horses.
The damage that Trojan Horses cause is much the same as what a virus causes.
Most of the time the users are unaware of the damage it is causing because of the Trojan Horse's masking effect.