CBD is​ the abbreviation for cannabid-iol. It is also referred to as an active phytocannabinoid, CBD-rich hemp oil, hemp-derived CBD oil, CBD-rich cannabis oil, or full-spectrum​ hemp extract. 

Cannabid-iol is one of the many cannabinoids found in the hemp plant.

A cannabi-noid is a molecule. It is a chemical compound which grows naturally in both hemp and cannabis plants.CBD molecules are extracted from flowers, leaves, and stalks to make oil.

Hemp is a strain of the cannabis plant, it produces very little THC which means it will not make you feel high. By definition industrial hemp contains less than 0.3 mg of THC.  Again CBD-derived from hemp will not make you high. It counteracts the effects of THC which does make you high.

CBD-derived from hemp is what you will see popping up in more and more retail stores while CBD from the cannabis sativa plant is found in dispensaries

Tinctures, gummies, lotions top the list of ways CBD oil can be delivered into the body.

As a daily supplement, CBD promotes homeostasis and wellness by supporting your body’s endocannabinoid system.

How Does CBD Work?

CBD is thought to be responsible for many of the medicinal benefits of the cannabis plant without the high of THC. Just like Nana's hot chicken soup can make you feel better all over, CBD works as a whole body medicine. It works as a tonic and goes to the places your body needs balance.

The job of the endocannabinoid system is to maintain homeostasis and to keep our bodies functioning at their best by adapting to change. 
Though not well understood the ECS is thought to play a role in regulating pain, sleep, mood, memory, appetite, and other cognitive and physical processes.

The endocannabinoid system is made up of many receptors. These receptors are located throughout the body, and can be found in the brain, and even throughout the nervous system and the immune system. There are 2 main receptors, CB1 and CB2. Together, they are responsible for regulating neuro-hormones in the body.

The endogenous cannabinoid system—named for the plant that led to its discovery—is one of the most important physiologic systems involved in establishing and maintaining human health. Endocannabinoids and their receptors are found throughout the body: in the brain, organs, connective tissues, glands, and immune cells. With its complex actions in our immune system, nervous system, and virtually all of the body’s organs, the endocannabinoids are literally a bridge between body and mind. By understanding this system, we begin to see a mechanism that could connect brain activity and states of physical health and disease.”
https://www.ncbi.nlm.nih.gov- high on the endocannabinoid system.

Illness, autoimmune disease, trauma to the body, chronic stress, foods we eat, and genetics contribute to an imbalance within a body system. A lack of endocannabinoid activity is thought to be present in many debilitating ailments such as fibromyalgia, migraine, multiple sclerosis, seizure disorders, chronic fatigue, IBS and more. The medical term for this condition was termed ‘clinical endocannabinoid deficiency syndrome’ (CEDS) by Ethan Russo, M.D. in 2003. Prolonged exposure to stress depletes endocannabinoid tone, and this, in turn, has an adverse impact on a plethora of physiological processes.
Learn more about The Endocannabinoid System: Hemp and Beyond in May 2018 Whole Food Magazine

The above video is 18 minutes long - worth it if you want to better understand the science of CBD.

Is there clinical data to support that it does work?

The Cannabis Review is a collection of scientific studies on cannabis arranged to help us better understand the unique chemical components and their potential applications.