An interactive panorama is sort of a virtual room. It's a single image that you can pan around in, usually 360 degrees. These are a great alternative to animations as they are much faster to produce and are much smaller files. Not only do they give the viewers the sense of being there, but they allow the viewers to look around on their own - something a predefined animation won't allow. Simply click the image with your mouse, then drag (while keeping your mouse clicked) to pan around the image.
To view the panoramas, you may need to download and install the latest version of Quicktime. You can download this for free here.