Bird chillies are usually green and approximately 2-3cms long. They are the spiciest chilli available, far stronger than jalapeno peppers. In contrast red chillies are usually twice the size and slightly milder.
They are used to add spice to Thai food, and also they are inserted whole (minus the stalk) into dishes to add a pocket of sharp hotness to bite into. Thailand has a dish, 'Nam mu' which is raw pork pounded together with rice and formed into parcels for eating. At the centre of the parcel they often place a bird chilli which is quite a shock as you bite into it.
As with large red chillies, remove the stalks, wash, discard any soft chillies and freeze them. Once frozen they can be kept for up to a year.