A simple definition:
The Soundex code is an indexing system which translates names into a 4 character code consisting of 1 letter and 3 numbers.
Soundex Usages
The most familiar Usage of Soundex is its use by the US Bureau of the Census to create an index for individuals listed in the US census Soundex was designed to phonetically index surnames. In the days when nearly all of the data for the Census of Population was collected by actual enumerators and individuals who walked from door to door, it was discovered that many of these people spelled surnames phonetically. This is understandable since some of the people being countered were illiterate. Thus, one might spell Smith as "Smith" while another might spell it as "Smyth" and still another "Smythe."
So by indexing by Soundex will group names by sound rather than the exact spelling.
Take, for example, my surname Lacy. A census recorder or a family might spell the name variously as
Lacy, Lacey, or maybe even Lasey etc. The Soundex code for all of these is L200.
Application to Genealogy
Since the principle of Soundex is that names are coded in such a way that spelling variants of a name should all receive the same code. So one may search for ancestors even though their names be given in a variant form.
However while mis-hearing is, of course, the major cause of surname variance in genealogy, but genealogists are also concerned with variants arising from other causes: eg patronymics, anglicization, or the dropping of prefixes such as "De" or "Von". For example the Surnames Lacy and Lacey are derived from De Lacy but since De Lacy doesn't sound like Lacy it gets the Soundex D420 instead of L200 like Lacy and Lacey.
