Magic smoke

Magic smoke (also factory smoke, blue smoke, or the genie) is a humorous name for the caustic smoke produced by severe electrical over-stress of electronic circuits or components, causing overheating and accompanying release of smoke. The smoke typically smells of burning plastic and other chemicals. The color of the smoke depends on which component is overheating, but it is commonly white or grey. Minor overstress eventually results in component failure, but without pyrotechnic display or release of smoke.
The name is a running in-joke that started among electrical engineers and technicians. It was more recently adopted by computer programmers. The device operates as long as the magic smoke is trapped inside of it, but when the smoke escapes from it, the device ceases to operate. Ergo, the smoke is an essential part of the device and its operation, through undetermined ('magical') means.
Usage.
This has led to phrases (and variants of) "You let the smoke out!", "There's too many angry pixies running through the circuit!", "The magic smoke is escaping." or "I think you set your power supply too high; there is magic smoke coming from that resistor!" as euphemisms for the destruction of a component by overheating.
When a device is powered on for the first time, it is often called a "smoke test".
Red Hat Linux 6.1 included the following text in the hardware compatibility guide:
Tier 3 Incompatible and Unsupported CPUs
The joke in the above quotation is the concept of a "Smokeless CPU"—one in which the vital magic smoke has been released, rendering it inoperable. The joke remained in Red Hat 6.2, but was removed in a subsequent version.