Caption: "Lightning over the outskirts of Oradea, Romania, during the 2005 Aug17 thunderstorm which went on to cause major flash floods over southern Romania."

Lightning occurs when a large electric charge separation builds up between clouds and ground or clouds and clouds. The electric charge separation causes a strong electric field that in turn causes an electrical breakdown of the air turning it into an electrical conductor of ions and free electrons. Then a strong electrical current flows in a somewhat chaotic way between the separated electric charge regions converting electrical potential energy into the energy of electromagnetic radiation (the lightning light), heat, and sound (the thunder). Lightning is, of course, a plasma.

The electrical potentials of lightning can go up to ∼ 100 megavolts (MV) and the discharges typically have currents of ∼ 30 megaamperes. Lightning emits visible light, ultraviolet infrared, radio, X-rays, and even gamma rays. Temperatures may approach ∼ 28,000 K and electron densities may exceed 10**24 m**(-3).

Interesting factoids:

Trees hit by lightning can explode because the heating from the electrical current can vaporize their sap explosively.
If you are outside and NOT building up static electricity by innocent playground activities (see Static on the playground image) and your hair stands on end, get of there pronto since a lightning strike is possible. The standing on end is because a strong electric field has given your body a net electric charge and its parts now repel each other. This self-repulsion is most obvious for hair.