Since honeypots have already been discussed you can obviously see that. But what a tarpit is, is a software utility that mimiks machines on your network. It will create new, replicate, ect, machines within your IP block. A tarpit is used to slow down scans and DoS attacks. Since the fake computers are not there, every ping, ip scan, ect, sent there way will take the maximum ammount of time to time-out. This will cause any type of scan for trojans, open ports, or even dos attacks to target sometimes thousands of computers that do not exist. Which will in turn slow down the attack substantially allowing you to recover quicker, and safe-gaurd you system with less of a loss to you.
A very good tarpit that I have used before on my computer network is LaBrea. Available for download at www.HackBusters.net
A more detailed explanation is also available at that link.