Wood is a great building material. It is strong, lightweight, easily worked with tools and relatively inexpensive. The only problem with wood is that many varieties of bacteria, fungi and insects find it appetizing. When wood is in contact with the ground or moisture for any period of time, these organisms attack the wood. Untreated wood like pine will only last a year or two if it is touching moist ground.
Pressure treated lumber is wood that has been immersed in a liquid preservative and placed in a pressure chamber. The chamber forces the chemical into the wood fibers. The pressurized approach makes sure the chemical makes it to the core of each piece of wood - it is much more effective than simply soaking the wood in the chemical.
The most common chemical used to treat lumber is called chromated copper arsenate, or CCA. Copper and arsenic are both toxic to different types of organisms that attack wood. The chromium helps to bond the copper to the wood to prevent leaching. CCA binds to wood fibers very well and allows wood to last decades when it is in contact with the ground.
The protection provided by the chemical depends on the amount of chemical that the wood absorbs. In the U.S. the amount of chemical is measured in pounds of chemical per cubic foot of wood. For ground contact, 0.40 pounds per cubic foot are needed. For foundations 0.60 pounds per cubic foot is the standard.
The chemicals in treated wood are generally not good for humans either. This is why you will see warnings advising you to wear gloves, avoid breathing the sawdust and refrain from burning treated wood. Keeping small children away from treated wood is also appropriate.
Here are two interesting links;