Computational fluid dynamics (CFD) is the use of computers to analyze problems in fluid dynamics.
The most fundamental consideration in CFD is how one treats a continuous fluid in a discretized fashion on a computer. One method is to discretize the spatial domain into small cells to form a volume mesh or grid, and then apply a suitable algorithm to solve the equations of motion (Euler equations for inviscid, and Navier-Stokes equations for viscid flow). In addition, such a mesh can be either irregular (for instance consisting of triangles in 2D, or pyramidal solids in 3D) or regular; the distinguishing characteristic of the former is that each cell must be stored separately in memory. Lastly, if the problem is highly dynamic and occupies a wide range of scales, the grid itself can be dynamically modified in time, as in adaptive mesh refinement methods.
Basically, one applies numerical methods, primarily FEM, to fluids.
http://en.wikipedia.org/wiki/Computational_fluid_dynamicsSome of the Wikipedia information may not be entirely correct. One wants a convergent solution, and the modeling is validated against experiments. Laser Doppler Anemometry is one method used to validate local flow velocities and velocity profiles.