Installing third-party applications or so-called iTouch/iPhone jailbreak
The only official way to obtain third-party applications for the iPod Touch is Apple's App Store, which is a branch of iTunes Store. The App Store application, available in all versions of the iPhone OS from iPhone OS 2.0 onwards, allows users to browse and download applications from a single online repository (hosted by Apple) with the iTunes Store.
To develop such software, a software development kit (SDK) was officially announced on March 6, 2008, at an Apple Town Hall meeting.[23] The iPhone SDK allows developers to make applications for the iPhone and iPod Touch after paying a fee to join the development team. The developer can then set the price for the applications they develop and will receive 70% of money earned. The developer can also opt to release the application for free and will not pay any additional costs.
Shortly after the iPod Touch was released, hackers were able to "jailbreak" the device through a TIFF exploit. The resulting application enabled the user to download a selection of unofficial third-party programs. Some of these give the user more control over the iPod Touch than is officially available, and also make it possible to install Linux operating systems on the device. All officially released versions of the iPhone OS through 3.0 can be jailbroken, Servicing an iPod Touch after jailbreaking or other modifications made by unofficial means is not covered by Apple's warranty. So be warned if you want to make any modification to your iTouch.
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