Originally seen as a bearded penguin (a reference to Tux, the penguin mascot of the kernel program Linux), the more friendly image of a girl with helmet and flippers was chosen as a human alternative. Her helmet usually has horns on it, likely a reference to the GNU operating system whose components usually combine the system programs in Linux systems (hence GNU/Linux). The gear-teeth on the helmet is a reference to KDE, a common desktop environment used with GNU/Linux. Also, the foot symbol on her shirt is a reference to GNOME, another common desktop environment. She is often seen with a spear that has flags attached representing GRUB (GRand Unified Bootloader: a bootmanager, which is most commonly used on Linux-systems), LILO (the traditional LInux-Loader) and GCC (the GNU Compiler Collection, which includes the C-compiler with which most of the Operating System was written) -- rather important applications on every GNU/Linux-system. The helmet and spear most likely reference the high level of attention to security (defensive helmet) and hacking (offensive spear) found in Linux applications.
Linux-tan is said to be either a generic Linux-distribution, or the original Linux which Linus Torvalds uploaded and which improved over the time.
Additionally, a large number of Distro-tans exist.