Problem: There is a need for languages that allow you to write reliable, scalable, production distributed systems.
Solution: What you need is true concurrency. You need lightweight processes, no shared memory, asynchronous message passing and mechanisms to change code on the fly so that programs can evolve and change as they run in non-stop systems.
Erlang’s main idea is to give you a more restrictive programming model provides good primitives for writing distributed applications while limiting features that can cause problems.
Concurrency - Erlang has extremely lightweight processes whose memory requirements can vary dynamically. Processes have no shared memory and communicate by asynchronous message passing. Erlang supports applications with very large numbers of concurrent processes. No requirements for concurrency are placed on the host operating system.
Distribution - Erlang is designed to be run in a distributed environment. An Erlang virtual machine is called an Erlang node. A distributed Erlang system is a network of Erlang nodes. An Erlang node can create parallel processes running on other nodes, which perhaps use other operating systems. Processes residing on different nodes communicate in exactly the same was as processes residing on the same node.
Robustness - Processes in a distributed system can be configured to fail-over to other nodes in case of failures.
Hot code upgrade - Many systems cannot be stopped for software maintenance. Erlang allows program code to be changed in a running system. So it is possible to install bug fixes and upgrades in a running system without disturbing its operation.
External interfaces - Erlang processes communicate with the outside world using the same message passing mechanism as used between Erlang processes.
Erlang’s evolution from a telecom environment means that it was developed a high degree reliability. Telecoms also require upgrades with no down time and handling/isolation of failures.
Criticism: “I think the problem with Erlang is that it's more than 20 years old and for most of this time haven't been exposed enough to developer community at large. It's like raising a child in a cellar for all its childhood and don't let it interact and learn from his/her peers.” This quote from another commenter sums up my central criticism of Erlang.
Tradeoffs: The main trade-off is that one gains the inherent concurrency and parallelization of processes while having to deal with an unwieldy 20 year old language. One should be able to use another programming language with a model of actors communicating by asynchronous messages and prohibiting shared state between actors.
Future Influence: Amazon, Facebook and other companies are now using Erlang for web systems. Erlang is being used because companies select the technology that is best suited to survive while evolving. I expect that other languages will be developed over time that will give us that will give us the best of modern languages and merely prohibit features that are not well handled in distributed systems, such as shared state.