"FIR means "Finite Impulse Response". The impulse response is "finite" because there is no feedback in the filter; if you put in an impulse, zeroes will eventually come out after the "1" sample has made its way in the delay line past all the coefficients. DSP filters can also be "Infinite Impulse Response" (IIR). IIR filters use feedback, so when you input an impulse the output theoretically rings indefinitely.
Each has advantages and disadvantages. Overall, though, the advantages of FIR filters outweigh the disadvantages, so they are used much more than IIRs. Compared to IIR filters, FIR filters offer the following advantages:
They can easily be designed to be "linear phase" (and usually are). Put simply, linear-phase filters delay the input signal, but don't distort its phase.
They are simple to implement. On most DSP microprocessors, the FIR calculation can be done by looping a single instruction.
They are suited to multi-rate applications. By multi-rate, we mean either "decimation" (reducing the sampling rate), "interpolation" (increasing the sampling rate), or both. Whether decimating or interpolating, the use of FIR filters allows some of the calculations to be omitted, thus providing an important computational efficiency. In contrast, if IIR filters are used, each output must be individually calculated, even if it that output will discarded (so the feedback will be incorporated into the filter).
They have desireable numeric properties. In practice, all DSP filters must be implemented using "finite-precision" arithmetic, that is, a limited number of bits. The use of finite-precision arithmetic in IIR filters can cause significant problems due to the use of feedback, but FIR filters have no feedback, so they can usually be implemented using fewer bits, and the designer has fewer practical problems to solve related to non-ideal arithmetic.
They can be implemented using fractional arithmetic. Unlike IIR filters, it is always possible to implement a FIR filter using coefficients with magnitude of less than 1.0. This is an important considertaion when using fixed-point DSP's, because it makes the implementation much simpler.
Compared to IIR filters, FIR filters sometimes have the disadvantage that they require more memory and/or calculation to achieve a given filter response characteristic. Also, certain responses are not practical to implement with FIR filters" .