Computer-generated art is art created with a computer. The term is usually appied to works created entirely with a computer. It is a subset of digital art.
Movies make heavy use of computer-generated graphics; it is called computer-generated imagery (CGI) in the film industry. In the 1990s, and early 2000s CGI advanced enough so that for the first time it was possible to create realistic 3D computer animation. The film The Phantom Menace was widely noted for its heavy use of computer graphics.
Some people argue that completely computer-generated art isn't really art at all, since computers can't really appreciate beauty. See the definition of art.
The emerging answer seems to be that they makes a great paintbrush. A paintbrush makes no commentary about the quality of the work, but in the hands of a master can demonstrate the subtlest shadings and evoke the strongest emotions. The computer is a tool, and a liberating one; your standard paintbrush also doesn't have an Undo feature.
The utility of computers, along with the availability of inexpensive computers and software provides several advantages for thrifty artists. Compared to the price of oils and easel and canvases, a PC and the occasional trip to the copy shop looks almost thrifty.
There are two main paradigms in computer generated imagery. The simplest is 2D computer graphics and directly maps to how you might draw an image on a piece of paper with a pencil. In this case, however, the image is on the computer screen and the instrument you draw with might be a tablet stylus or a mouse, but the marks it makes will seem to be from a pencil or pen or paintbrush.
The second kind is 3D computer graphics, where the screen becomes a window into a virtual environment, where you arrange objects to be "photographed" by the computer. Of course the image generated is 2D, so you can always take it into your paint program for additions, much in the same way the Weekly World Inquirer Magazine inserted the space aliens in the coffee bar. Typically 2D computer graphics use raster graphics as their primary means of source data respresentations, whereas 3D computer graphics use vector graphics.