MacOS is the decendant of the System that was the OS on the Apple Macintosh computers. System 6 can run word processors, spreadsheets, and other applications in as little as a megabyte of ram on a machine with a 68000 processor at 7 1/2 megaHertz.
With System 7, Apple brought multitasking to their System, and through out the 7 series (7-7.6.1) added new features and capabilies while maintaining the nearly effortless ease of use that is their selling point. At 7.6 or so, System became MacOS, a separate product. This, and Apple licensing allowed for the emergence of Mac clone manufacturers, as had troubled IBM a decade earlier.
With the release of MacOS 8, the first major version change in seven years or so, the MacOS regained much of the ground it had lost (through standing still) to MS Windows (95). OS 8 is currently (late 97) outselling Windows 95. Apple computer is in the process of trying to destroy the Mac clone industry, by buying out the most prolific cloner and turning down renewals on it's licensing for the others.
Apple hasn't made a sound business decision in anyone's memory. Near as can be told, the current leadership of Apple is trying to save the company by sacrificing MacOS/the Macintosh. This is a sad thing to see. Macintosh is not the only great product Apple ever made,nor is it likely to be the last, but it is one of the most loved, and one of the few that ever made them any money.
See MacOSUi for discussion of the various looks of System/MacOS