"exact" means exactly what it says, it will match only the exct word/phrase used in the campaign.
"broad" on the other hand means the exact opposite. The ad will be shown for synonyms, plurals, the phrase words in different order, partial matches for the phrase etc.
Or of course you could simply ask Google themselves.
http://adwords.google.com/support/aw...en&answer=6136
http://adwords.google.com/support/aw...en&answer=6100
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