The easiest way for me to explain it is this. Someone else step in here if they can break this down better:
Adobe Photoshop is a "paint" (raster) program, so you're painting and not creating shapes.
Adobe Illustrator is a "vector art" program so you use tools to make shapes. You cut up this shapes to make any number of designs and effects.
Adobe InDesign is a page "layout" program where you assemble everything.
There are hybrid programs out there also like Macromedia Freehand, Corel Draw, etc which combine several of these program attributes. Adobe likes to break theres apart and keep them seperate though.
Each of these programs requires very disciplines to master, though skills certainly carry of between each. I've known awesome Graphic Layout people who couldn't design a logo to save their life. I've known people who are masters of retouching photo's who wouldn't know the first thing about laying out a magazine spread. Hope that helps, it's not so easy for me to put into words.
