The Canon L lenses are much more expensive and presumably much better quality than non-L lenses. What makes an "L" lens? How much better are they over a similar length/speed "ordinary" canon lenses?
According to Canon, L lenses contain all their best technologies like ultrasonic focusing motors, florite and aspherical lens elements for best optical performance, and are built to survive being used by the pro photographers. Many times this also means sealing against dust and humidity.
Let's take these two lenses:
In this case, the L version is much better built, 50% heavier, with better image stabilizer, more sophisticated optical construction, weather sealing, ring-type USM with full-time manual (consumer version has just micro-USM motor). Optically the L version performs better than the non-L, but not as good as EF 70-200 f/4 L IS, and nowhere as good as €400 EF-S 60mm macro lens.
Additionally, the L telephoto lenses are white, which is meant to reduce chance its insides overheat on the sun as well as tell everyone around you have a Canon L lens.
Overall: L lens will be heavier, optically and mechanically better, and more expensive than similar non-L lens. This does not mean it will outperform everything else regardless of lens type.
There is no one definitive answer for that, as the differences are in a few areas. It is usually regarded as having a superior optical quality, but from reviews and sample images it can be seen that this is not always the case - at least sometimes you get results which you'd not expect from a "L". Similarly, for a non-"L" lens there are examples of lenses giving "L" quality.
Then there is a difference in build quality. Many, if not all, "L" lenses are weather sealed, which means that with a matching body, you can shoot even in light rain and expect no damage to your equipment.
Targeted at the pro audience, there is no EF-S "L" lens, I guess b/c Canon assumes pros use only full frame (or APS-H) bodies. I wonder if this will change in the future as more pros are using a 7D as their tool.
Oh, and one more thing - the L's have that sexy red ring...
(I'd mention the white color, but not all of them are colored white - it is mainly kept for the longer ones).
In addition to the improvements in build quality, performance and use of flourite elements mentioned above, another thing unique to the L series is that all L lenses come with a leather bag (or proper case for the super-teles) and a lens hood.
So even though you just spent £700 ($1100) on the EF-S 17-55mm f2.8 IS, you wont get a small plastic hood thrown in! (that will cost you another £20)
Just got my new L series today. I have owned another L series for several years, and a couple regular lenses for years before that. I have used both the L series and the regular lens to photograph a wedding recently. In my opinion, the L series really generates pictures that make it seem as though you are right there in the moment when you are looking at them, in a photographically candid sense, when you take a picture. I have put my regular lens photos side by side with the L series photos, and while I've captured some pretty good ones with the regular lens, the L series just seems to add another dimension. It's almost as though it can capture what I'm looking at as well as my eyes--the depth perception of the objects, the vividness, the contrast of colors, etc.
L series would probably be a good investment if:
(a) You take photos a lot and are serious about photography/cataloguing moments (b) You're considering being professional (c) You have the money to splurge on a one time quality item
If you do infrequent photography, like just the occasional bar-b-q, the standard lens that comes with the EOS camera packet should be fine.