From DT Online
CAD, or Computer Aided Design (and sometimes Computer Aided Drawing), involves the use of computers to produce the Technical Drawings required to manufacture products and which were once produced by Draftsmen working in Drawing Offices.
Fully functioning CAD software has developed beyond just using computers to make drawings and can now also perform more complex tasks based on the drawing data (e.g. work out volumes, auto-route pcb's and calculate the degree of Stress experienced by components).
Some CAD software is also Parametric which means that the drawn model is linked in such a way that individual dimensions can be altered and the rest of the model changes to accommodate the change (i.e. a net drawn in Packaging Designer can not only be scaled larger or smaller but its proportions altered to make it longer or thinner if need be).
There are some well established proprietary 2D software packages used in schools and various industry standard CAD programs. In addition there are free-to-use illustration packages (e.g. Sketchup Make) and free, Open Source fully functioning CAD applications (e.g. FreeCAD).
CAD software can be linked directly to a Computer Controlled (CNC) Machine Tool such that the drawing is used program the machine and make the part automatically. This becomes known as a CADCAM operation and is one of the many ways in which computers now assist engineering in all its forms.