A funny name for a lens, but quite descriptive. A pancake lens is a very short, manual focus, fixed focal length lens.  Looks a bit like a hockey puck.  People are amazed by how small they are, especially when mounted on a large SLR body.  The design is based on a Zeiss design developed in the 19th century.  The design offers a very sharp, low distortion, super compact, relatively fast, light weight lens.  This may be the difference between taking your camera with you or leaving your “grenade launcher” lens at home. People that shoot "on the street" love these lenses because the lenses are so small.  

A popular lens is the Nikon 45mm f/2.8. You can find them very cheap on ebay.