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Homology has to be distinguished from analogy; for instance, the wings of insects and the wings of birds are analogous but not homologous. The similar structures evolved through different pathways, a process known as convergent evolution.
In genetics, homology is used in reference to protein or DNA sequences, meaning that the given sequences share ancestry. Homology can be of two types: orthology or paralogy. Two sequences are orthologous if they are homologous and were separated by a speciation event; if a gene exists in an organism, and that organism diverges into two species, then the copies of this gene in each of the resulting species are orthologous. Sequences are paralogous if they are homologous and were separated by a gene duplication event; if a gene in an organism is duplicated, each copy of the gene is paralogous.
Homology among proteins and DNA is often concluded on the basis of sequence similarity, esp. in bioinformatics. For example, in general if two genes have an almost identical DNA sequence, it is likely that they are homologous. However, it is possible that highly similar sequences are not similar because they were derived from a common ancestor, i.e. they are similar but not homologous.