A dropper is a Trojan program that, when run will attempt to install a regular virus onto your hard disk.
Normally, you obtain a virus by either attempting to boot from an infected floppy disk, by running an infected file, or by loading an infected document with viral macro commands in it. There is another way you can pick up a virus: by encountering a virus dropper. These are rare, but now and again someone will attempt to be clever and try to program one.
Basically, a dropper is just what the name implies: a program designed to run and install (or "drop") a virus onto your system. The program itself is not infected or a virus because it does not replicate. So, technically, a dropper should be considered a Trojan. Often, because the virus is hidden in the program code, a scanner will not detect the danger until after the virus is dropped onto your system.
It's a technical point, but there is a class of dropper that only infects the computer's memory, not the disk. These are given the name injector by some virus researchers.
A Trojan program that installs a virus onto your system is called a dropper.
Fortunately, because of technical difficulties, droppers are hard to program and therefore rare.