I've never heard of this theory before and I was trying to explain this concept to my dad just last night. Aggregated intelligence, a truly amazing thing.
Condorcet rigorously demonstrated that, in large elections, many heads are better than one. Consider a contest between two candidates. Each voter has some information about which candidate will be better, but no individual can be sure that his or her information is accurate. If any one individual has to make the decision, he or she would choose according to the information available. However, there is a significant probability that the decision would be incorrect.
On the other hand, if each person's information is somehow correlated with the truth, then, even though no single individual is well-informed, the electorate in the aggregate is very well-informed. Condorcet's theorem demonstrates that if people vote according to the information they have at hand--even if it is scarce or incomplete--then, in large elections, the outcome will be the same as it would be if all voters were perfectly informed. That is, elections successfully aggregate information and produce results better than any individual acting alone.
Thanks to Greg Mankiw for finding this piece at Forbes.