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We discuss a lot of topics and use measures of entropy to determine how difficult it is for an attacker to be successful. What does entropy mean in the context of cryptography? How is entropy calculated in the general case?

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In information theory, entropy is the measure of uncertainty associated with a random variable. In terms of Cryptography, entropy must be supplied by the cipher for injection into the plaintext of a message so as to neutralise the amount of structure that is present in the unsecure plaintext message. How it is measured depends on the cipher.

Have a look at the following article. It provides a survey of entropy measures and their applications in cryptography: "Entropy Measures and Unconditional Security in Cryptography (1997) "

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Bill is right. To give you a short answer to your question: The common notion of entropy is the notion of Shannon entropy. The Shannon entropy $H(x)$ of a value $x$ that occurs with probability $Pr[x]$ is

$H(x) = -log_2(Pr[x])$

you can interpret this as the uncertainty about $x$ knowing only the distribution according to which $x$ is chosen. For the case of bit strings the important message is, the entropy not always equals the bit length of $x$. I.e. if you want to seed a pseudo-random generator, it is important to choose a seed with high entropy. If you use the actual time as seed the entropy of the seed is very low, as everybody can easily guess parts of the seed (year, day, perhaps even hour and minute). Ask Netscape they should have learned this…

There are several other notions of entropy all discussed in Bills reference, but I this is the most important one, if you don't want to study complexity or information theory.

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