Common Era
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The Common Era refers to the conventional numbering of years (in the Julian and Gregorian calendars) from an epoch based on the traditionally reckoned year of the birth of Jesus Christ. This convention for year numbering was introduced by the christian monk Dionysius Exiguus in 525 CE, although it was not widely used until later.

Years before the epoch were denoted A.C.N. (for Ante Christi Natus, Latin for "before the birth of Christ"), although B.C. ("Before Christ") is now usually used in English.

These abbreviations are placed after the year number, which is counted backward from 1; that is, the first year before the epoch is "1 B.C.", the second year before the epoch is "2 B.C.", etc. Years after the epoch are denoted A.D. (for Anno Domini, Latin for "in the year of the Lord"). In strict literal latin, the number should follow AD, but in practice, the number has generally come to be placed in front of the letters, e.g. "1 A.D." (there being no year 0), etc.

C.E., an abbreviation for "Common Era" or "Christian Era", is equivalent to A.D. and is preferred by some in secular writing. B.C.E., an abbreviation for "Before Common Era" or "Before Christian Era", is equivalent to B.C., and is likewise placed after the year number.

Synonyms:

Before Common Era ("BCE"), Before Christ ("BC"), Ante Christum Natum ("ACN")
Common Era ("CE"), Anno Domini ("A.D.")
Due to the dominant influence of Christianity in the development of Western civilization over the last 2,000 years, the initials B.C. (or A.C.N) and A.D. have been used, to a large extent without question, for many centuries. Rejecting the historical dominance of Christianity in Western civilization, the movement to substitute B.C.E./C.E. for B.C./A.D. has grown in Anglo-Saxon academia and elsewhere.

See also: Anno Domini, Astronomical year numbering

The "Common Era" (i.e. nowadays)
If you clicked on a link to this page it's probably because you're wondering what "CE" or "BCE" means. "CE" means "Common Era" (or alternatively, "Christian Era") and refers to the same dates as "AD" or "Anno Domini" does. (Except that "AD" goes before the year number and "CE" goes after it: e.g. "AD 1996" is the same year as "1996 CE".) Why does it matter? Why invent another abbreviation? Well, an awfull lot of people don't realize what AD stands for or means. "Anno Domini" is Latin for "in the year of Our Lord", referring to Our Lord Jesus Christ. That is, "AD 1996" literally means "in the 1996'th year since the birth of the Christ." Now not all the world is Christian, so it makes no sense for a Jew, a Moslem, a Hindu, a Witch, a Druid, or an atheist to refer to the date as being in the year of "their Lord" when they don't follow him.

So "CE" is a more considerate way of labelling dates in the Gregorian calendar without rubbing non-Christian's noses in the fact that so much of the world is using a calendar based on the alleged birth-year of the man we Christians believe to be the Messiah. (Note that there are other calendars in use -- the Gregorian calendar is not universal. So there are plenty of people with their own perfectly good calendars who have to keep track of dates in our calendar so they can do international business, or just to communicate with the folks in their own neighbourhood if they live in a country that uses the Gregorian calendar.)

It's also more accurate for Christians, since today's best guesses as to when Jesus of Nazareth was born differ by four to six years from the best guesses the folks who invented our calendar had. So it is highly unlikely that Jesus was born in the year 1 CE. Which means that if one insists on calling that year AD 1, one is probably off by about five years. Personally, being a bit of a traditionalist, I'll probably continue using AD on personal correspondence with other Christians or folks who I know won't care and on certain published (or web-published or posted) stuff intended primarly for a Christian audience or intended to present an intensely personal and religious topic. Even though I know it's off by four to six years. I'm going to try to consistently use CE the rest of the time (when I bother to use either), and if I slip up I expect to be called on it so I can fix it.

Before Common Era (i.e. a loooong time ago)
As most people know, "BC" stands for "before Christ", and is therefore subject to the exact same problems as "AD". That is to say, for non-Christians it's somewhat inconsiderate and for Christians it's wrong by four to six years. So the common alternative is "BCE", or "Before the Common Era", which has the wonderful advantage of looking a whole lot like "BC", which it replaces.

Is this "Politically Correct"?
Well, it's polite and it's more accurate. I don't think anybody wants to go around changing all the dates on medieval tax records to pretend our ancestors used religiously-neutral language, or anything like that. It's just more considerate towards non-Christians, and it means that Christians discussing the actual date of the birth of Jesus don't have to say silly things like "Christ was probably born around 4 years Before Christ." Instead we can say, "... around the year 4 BCE, possibly as early as 6 BCE."

So never mind the "political correctness" angle -- just look at it in terms of politeness, consideration, and accuracy.