Nacelle

A nacelle ( ) is a housing, separate from the fuselage, that holds engines, fuel, or equipment on an aircraft. In some cases—for instance in the typical "Farman" type "pusher" aircraft, or the World War II-era P-38 Lightning—an aircraft's cockpit may also be housed in a nacelle, which essentially fills the function of a conventional fuselage. The covering is typically aerodynamically shaped. 
Etymology.
Like many aviation terms, the word comes from French, in this case from a word for a small boat.
Development.
The Nazi-developed Arado Ar 234 was one of the first operational jet aircraft to feature engines mounted in nacelles. This is known as a Podded engine. During its development, the four jet engines were merged from having four distinct nacelles, all of which contained their own landing gear wheel, to two nacelles with two engines each.
In recent years, General Electric and NASA have developed nacelles with chevron-shaped trailing edges to reduce the engine noise of commercial aircraft, using an experimental Boeing 777 as a test platform. Boeing then developed this nacelle shape for use with its 787 Dreamliner.
Applications.
For the most part, multi-engined aircraft will use nacelles for housing the engines, called a Podded engine. There are exceptions to this however: fighter jets (such as the Eurofighter Typhoon) typically have the engines mounted within the fuselage. Also, some engine housings are integrated into the aircraft's wings, such as those of the De Havilland Comet and Flying Wing type aircraft. Engines may be mounted in individual nacelles, or in the case of larger aircraft such as the Boeing B-52 Stratofortress (pictured right) may have two engines mounted in a single nacelle. Nacelles can be made fully or partially detachable for holding expendable resources such as fuel and armaments. Nacelles may be used to house equipment that is too large to fit into the fuselage, for example the Radome on the Boeing E-3 Sentry.
Design considerations.
The primary design issue with any aircraft-mounted nacelle is aerodynamics. Nacelles attached to monoplane wings are almost always mounted underneath, as this is the "high pressure" side of an aircraft wing. This means that the airflow is slower and thus less sensitive to obstructions than the upper "low pressure" side. To keep Form drag as low as possible, nacelles are usually mounted on slender pylons. This can cause issues with routing the necessary conduits required for the equipment mounted within the nacelle to connect to the aircraft through such a narrow space. This is especially a concern with nacelles housing engines, as the fuel lines and control lines for multiple engine functions must all go through the pylon. 
It is often necessary for nacelles to be asymmetrical, but aircraft designers try to keep asymmetrical elements to a minimum to reduce operator maintenance costs associated with having two sets of parts for either side of the aircraft. Nacelles are often mounted facing slightly downwards of the horizontal plane to compensate for the aircraft's cruising angle of attack.