What is "original sin," and what do Catholics mean by saying that Saint Mary was preserved from the stains of original sin?

There are two kinds of sin: original and actual [1]. Original sin is the direct effect of the fall—we are all "born this way"--and it is normally remitted through the waters of baptism. Actual sins are any sins which we ourselves commit [2]. Anything which you have done which is evil, or anything which you should have done which was good and chose not to do is an actual sin. These sins are normally remitted through confession. It is ultimately Christ's suffering and death which atone for both kinds of sin, and through His resurrection that we are able to be reconciled with God; thanks to these things we may be justified before God (BC2 Q102; see [0]).

So what is original sin, and what are its effects? Original sin is the state into which we come into being at our conception as a result of the fall. It basically means that we have fallen from the state of preternatural grace into which our first parents were created. It is not something which we acquire directly through our own personal fault, but rather is something which is transmitted to us though our parents (and to them though their parents, and so on). The Catechism of the Catholic Church explains original sin thus:
"Although it is proper to each individual, original sin does not have the character of a personal fault in any of Adam's descendants. It is a deprivation of original holiness and justice, but human nature has not been totally corrupted: it is wounded in the natural powers proper to it, subject to ignorance, suffering and the dominion of death, and inclined to sin - an inclination to evil that is called concupiscence". Baptism, by imparting the life of Christ's grace, erases original sin and turns a man back towards God, but the consequences for nature, weakened and inclined to evil, persist in man and summon him to spiritual battle" (CCC 405).

We come into the world with a wounded nature. The effects (CCC 418) of this wounded nature—this state of original sin—are that we are all subject to suffering and death, on the one hand; and that we are ignorant and weak of will, and given inclinations "to seek unlawfully sensible and temporal goods" (CST Part 2 Section XI)—concupiscence. These things in turn lead us to commit actual sins. We also forfeit the state of constant happiness without sorrow which our first parents would have known in this life, and the certain state of eternal glory in the next, had they not Fallen (BC2 Q42). We also lose the strong inclination towards virtue which they enjoyed in their unfallen state:
"From the beginning God implanted in all creatures an inborn desire of pursuing their own happiness that, by a sort of natural impulse, they may seek and desire their own end, from which they never deviate, unless impeded by some external obstacle.- This impulse of seeking God, the author and father of his happiness, was in the beginning all the more noble and exalted in man because of the fact that he was endowed with reason and judgment. But, while irrational creatures, which, at their creation were by nature Food, continued, and still continue in that original state and-condition, unhappy man went astray, and lost not only original justice, with which he had been supernaturally gifted and adorned by God, but also obscured that singular inclination toward virtue which had been implanted in his soul. All, He [God] says, have gone aside, they are become unprofitable together; there is none that doth good, no, not one. For the imagination and thought of man's heart are prone to evil from his youth. Hence it is not difficult to perceive that of himself no man is wise unto salvation; that all are prone to evil; and that man has innumerable corrupt propensities, since he tends downwards and is carried with ardent precipitancy to anger, hatred, pride. ambition, and to almost every species of evil." (Catechism of Trent, my emphases)

We suffer a weakened or "obscured" inclination to virtue. This means the "natural" or "cardinal" virtues—prudence, justice, temperance, and fortitude—and also the "supernatural" or "theological ones—faith, hope, and charity. We are "prone to evil," and worse still, we often do not recognize evil for evil or good for good:
"Although man is continually beset by these evils, yet his greatest misery is that many of these appear to him not to be evils at all. It is a proof of the most calamitous condition of man, that he is so blinded by passion and cupidity as not to see that what he deems salutary generally contains a deadly poison, that he rushes headlong after those pernicious evils as if they were good and desirable, while those things which are really good and virtuous are shunned as the contrary. Of this false estimate and corrupt judgment of man God thus expresses His detestation: Woe to you that call evil good, and good evil; that put darkness for light and light for darkness; that put bitter for sweet, and sweet for bitter." (Catechism of Trent, my emphases).

This is the state into which we are all born—all, of course, save two exceptions [3]. As Catholics, we believe that Mary was uniquely preserved from this state. This preservation is not something which she merited herself, but rather is a special action of God's grace. She is "full of grace" (Luke 1:28), meaning that
"in the first instance of her conception [Our Lady] was, by a singular grace and privilege of Almighty God in view of the merits of Jesus Christ, the Savior of the human race, preserved exempt from all stain of original sin" (Ineffabilis Deus).

Note well a few things that are not implied by this doctrine. First, it is not implied that she was without need of a Savior. This preservation from sin was by the grace merited by Christ, though operating in a special manner in her case. Second, it does not mean that Saint Mary was conceived by the power of the Holy Spirit (as was Jesus Christ); she had human parents as do we all [4], and was conceived in the usual way. She was, however, preserved free from sin:
"Victory over the 'prince of this world' was won once for all at the Hour when Jesus freely gave himself up to death to give us his life. This is the judgment of this world, and the prince of this world is 'cast out.' 'He pursued the woman' but had no hold on her: the new Eve, 'full of grace' of the Holy Spirit, is preserved from sin" (CCC 2853).

This is what the Church teaches. And this supreme victory of Christ over sin is what we celebrate on the Feast of the Immaculate Conception. Why the Church teaches this [5] will be for another day. However, it is perhaps worth ending on a passage written by a Protestant convert to Catholicism. In his Born Fundamentalist, Born Again Catholic, Mr David Currie writes about the difference between the Catholic and the Evangelical-Protestant understandings of man's nature and the state in which he was created. Currie writes that
"Evangelicals teach that at creation God made man fully human. As a part of his human nature, he had his fellowship with God. When Adam sinned, he lost that fellowship and became less than fully human. The original sin resulted in what evangelicals call 'total depravity.' This means that there is absolutely nothing good in any man or in the actions of any man. Some Evangelicals would go so far as to say that even man's rational abilities are now defective. Man's tendency toward evil is insurmountable. At the Fall, mankind lost traits and abilities that were innately part of being fully human.

By the Evangelicals' own admission, this does not fit reality as we experience it: 'That sin renders the sinner totally depraved cannot be read from human experience" (Zondervan's Pictorial Encyclopedia). Because this scenario does not ring true, the reformers invented a doctrine called 'common grace.' Since this is not germane to our discussion of Mary, we will leave it at that.

Catholics have always taught that man was created fully human. But God endowed man with extra gifts (grace) that enabled him to have perfect fellowship with God and to have total control over his physical body. This was called the state of 'original justice.' These gifts were something above and beyond being fully human. These gifts were something above and beyond being fully human. No one could demand that these extra gifts be an integral part of his own personal human experience. They were extras.

The result of original sin was the loss of these extra gifts that were originally given to Adam. This meant that man, after the Fall of Adam, was unable to please God or to have fellowship with him. He also had an undeniable inclination to do wrong rather than right (concupiscence). He lost the total control over his body. Yet the Fall did not make him less than the fully human creature he was at his creation."

This is a good summary of what the Church teaches, and of what I have said so far. It also perhaps contains the key to understanding the doctrine of the Immaculate Conception: that what God did was not to make Our Lady more fully human than we are, but rather to restore to her the "extra" graces that were lost to us by original sin. With these graces she was thereby preserved from falling to temptation, and she was restored to man's original preternatural state, a state free of sin.

----Footnotes----
[0] A note about abbreviations. CCC = "Catechism of the Catholic Church," BC2 = "Baltimore Catechism Number 2", CST = "Catechism of the Summa Theologica."

[1] Actual sins may be further classes as "mortal" and "venial." A mortal sin is a grave sin committed with full knowledge and free consent; a venial sin is basically anything else which is a sin. That, however, would be the topic of another post.

[2] There are sins of commission, and sins of omission: what we have done, and what we have failed to do. I will use "commit" for convenience.

[3] Jesus Christ was also conceived without sin.

[4] For what it's worth, their names are Saints Anne and Joachim.

[5] Aside from the question-begging answer that the Church teaches this because it's true.