What is Fudge?
In this case, Fudge is not the delicious sweet made of lots of sugar, milk and butter, but a roleplaying game. It orginally stood for Freeform, Universal, Do-it-yourself Gaming Engine, but now it is more used as the word fudge, in the sense of "Just fudge it", as opposed to its acronymic meaning.
Fudge is a generic or universal roleplaying system, much like GURPS. Unlike most RPGs, it does not provide a setting, but is usable in any setting (hence the 'Universal' bit in the name). I would say that this system is more 'universal' than GURPS or other generic systems, as it allows the game master or referee (whatever your preferred term is) to completely specifiy everything about their universe, upto and including the attributes that the characters have. So you could run your game with no attributes, or with as many attributes as you can think of - my choice is a small list of 10 :). There also is no list of preset skills, gifts or faults. These are all left up to the Game Master to decide for themselves. Players are also strongly encouraged to create their own attributes, skills, gifts and faults, subject to the GM's approval, of course. This can seem quite daunting at first, especially for a green GM, and of course adds work to the preparation of a campaign. But, in the long run, it will pay off, as the system will adapt to fit your game, rather than you having to adapt your game to fit the system. As an added bonus, the Fudge system itself is also very easy to run and administer.
One of the main plusses (and in fact the reason why I checked it out in the first place), is that it is freely available as a download.