I know what fishing is, but what is different about fly fishing?
Fly fishing is a bit trickier, it uses a lure that is more lightweight and almost resembles a fly so fish bite at it.
So does the lure sit on top of the water as opposed to a worm or some other types of lures that go into the water?
Yes exactly, it does sit on top of the water and the fisherman use the lures so that it provokes the fish to bit at the handmade tie or fly at the end of the pole.
That's great!  Now, does this bait lure a specific type of fish?  
For more freshwater fishing, it would be fish like salmon or bass.
Are there specific "fly" lures for specific fish, or is the "fly" generic to attract the salmon or bass? 
It is more of a generic term because the fisherman are just using hand tied "flies" to resemble baitfish or other insects. It is pretty interesting.
Fly fishing
Hehe, yeah it's an interesting way to catch fish. Sounds fairly difficult, but it can be done in salt or fresh water.
Fly fishing