Ever since Facebook launched its f8 platform for application developers in May 2007, the tech industry has agreed that widgets are big business. Trouble is, for a long time venture capitalists and entrepreneurs couldn't seem to agree on what the business actually was.

First, there's the tricky job of defining a widget. Some use the term to describe bits of code that can be copied and pasted into a social network profile page or blog; others use it to refer to all embeddable Flash-based tools, and still others refer to widgets as entire applications built around site-specific application programming interfaces (API).

Regardless of your preferred definition, VCs were initially hesitant to invest in developers of widgets, reasoning that the growth of widget companies could only be secondary compared to the growth of the third-party sites on which their tools were hosted. At the same time, entrepreneurs were cranking out thousands of wacky new programs by the day in the hope that something -- anything -- might stick with consumers.

As the industry has grown over the past year, both investors and developers have gained a better grasp of what to do with widgets. But many misconceptions still remain, preventing marketers from taking full advantage of these tools. Let's take a look, and separate the fact from fiction.