The Acid2 is a browser test designed by the Web Standards Project which employs HTML and CSS to attempt to reveal flaws in web browsers interpret standard formatting code. When correctly rendered, the Acid2 test will render the smiley face pictured to the above left.
Neither the current official, non-beta release of Internet Explorer nor the current official non-beta release of Firefox properly renders the Acid2 test. Though some beta testers for Firefox have reported that FF 3 Beta 2 choked on the Acid2, there are other reports that it renders correctly (I haven't switched to Firefox 3 yet for reasons I've already posted here).
For their part, the IE8 team downplayed the significance of their internal build supposedly passing the Acid2 test. Instead, Microsoft General Manager Dean Hachamovitch used it as an opportunity to highlight how far the IE team still has to go to reach their goals. He also seemed to be hinting at the team's intention to reserve the right to pick and choose which standards they mean to follow.
"When we look at the long lists of standards (even from just one standards body, like the W3C), which standards are the most important for us to support? The web has many kinds of standards -- true industry standards, like those from the W3C, de facto standards, unilateral standards, open standards, and more," he wrote. "The key goal (for the Web Standards Project as well as many other groups and individuals) is interoperability. As a developer, Id prefer to not have to write the same site multiple times for different browsers. Standards are a (critical!) means to this end, and we focus on the standards that will help actual, real-world interoperability the most. As a consumer and a developer, I expect stuff to just work, and I also expect backwards compatibility. ... While supporting the features tested in Acid2 is important for many reasons, it is just one of several milestones for the interoperability, standards compliance, and backwards compatibility that were committed to for this release."