Pros: A turbocharged engine is typically more fuel efficient than a regular engine at a given horsepower; pleasant punch for passing and merging
Cons: It can be thirstier than a regular engine if you have a heavy foot; turbochargers themselves can fail and be costly to replace
Summary: If you're shopping for a car and see the term "turbo" or "turbocharged engine," it means that the engine employs a device called a turbocharger. A turbocharger is an add-on part that uses recycled exhaust gases to increase power.
Turbocharged engines are very popular today because of their Jekyll and Hyde personality. Since the turbocharger generates extra power, it allows smaller turbocharged engines to equal larger nonturbocharged ones in acceleration. But because the turbocharged engines are smaller, they're also generally capable of better fuel economy. It's like having two engines in one: a small, economical engine for ordinary driving and a responsive, high-performance engine for passing and such.
But turbocharged engines are only more fuel efficient when you drive with a light foot. Once you get the turbocharger all worked up, even a small turbocharged engine can suck down gas just like those larger engines. So if you drive aggressively, you may want to consider a larger nonturbocharged engine, as you're not likely to see huge fuel economy gains with that driving style.
You also should consider that the turbocharger is another moving part that can fail. In fact, it often does fail during the life of the car. Not surprisingly, replacement turbochargers don't tend to be cheap.
What it means to you: In this era of ever-increasing fuel economy standards, the turbocharged engine is here to stay, and that's a good thing. Just don't necessarily expect miracles in terms of fuel economy, though some are very thrifty. "Your mileage may vary" is the operative phrase here.