Debian always has at least three releases in active maintenance: stable, testing and unstable.
There is a fourth criterion
The current (at time of writing) stable distribution of Debian is 3.0r0, codenamed woody. It was released on July 19th, 2002. Check http://www.debian.org/releases/ to ensure it is still current, and if not, come back and edit the wiki so it is. The current testing distribution is sarge. Eventually, sarge will become stable (a FeatureFreeze will occur), and then sarge will become stable, woody will become an unsupported older distribution, and a new name will be picked for the new testing tree.
The unstable distribution is called sid, and it doesn't get renamed.
The code names come from the movie Toy Story, because ex-Debian project leader BrucePerens used to work for Pixar. (He's now HP's Linux evangelist.)
Packages are installed into the `testing' directory after they have undergone some degree of testing in unstable. They must be in sync on all architectures where they have been built and must not have dependencies that make them uninstallable; they also have to have fewer release-critical bugs than the versions currently in testing. This way, they ensure (hope) that testing is always close to being a release candidate.
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