A dog is made of dog cells, a fly is made of fly cells, and humans are made of human cells....right?

Its not as simple as it may seem.  We've known for some time now that the human body is comprised of more bacterial cells than our own human cells (ten to twenty times as many, depending which microbiologist you ask).  Bacteria live harmoniously in us and on us - in our guts (where they aid in digestion, immune function, and nutrient absorption), on our skin, in our hair.  Beyond that, dysfunction of bacteria in our guts have now been linked to obesity, showing how our normal physiology is so reliant on these microscopic invaders.  In addition to bacteria, humans may also also carry around mites and fungi...we are more aptly described as a superorganism.

But these 'external' visitors, ie: on the surface of our own human cells, are not the whole story.  In fact, the genetic contribution of bacteria and viruses - most older than humans ourselves - are a large part of our genetic makeup. Our symbiotic bacterial colonies contribute 1000 times more genes to our overall genome (ie: if you sequenced the whole body, instead of just the human cells) than our human cells do.

Bacterial remnants are also found in each of our body's cells, in the form of our mitochondria (or the energy powerhouse of the cell).  Mitochondria contain their own double-membranes and their own set of DNA, and these striking similarities to bacterial cells have lead to the belief that eukaryotic (such as animal) mitochondria arose from an ancient symbiotic relationship between eukaryotic cells and the bacteria they engulfed.  So our cell's mitochondria are like fossils from ancient bacteria.

Viruses are also among us.  Yes, viruses cause sickness and disease, but viral DNA is also intermingled in our own DNA, and has been that way for millennia as a result of evolution. Around 100,000 pieces of viral DNA are scattered throughout the human genome.  However recent evidence (Nature, Jan 7, 2010) shows the presence of Borna virus in the human genome - and this is the first time a virus such as this has been found integrated in human genome, because Borna is an RNA virus instead of the more typical DNA virus.  Retroviruses (another RNA virus, HIV being the most well-known) are also found in our genetic code, and comprise about 8% of the human genome. Borna virus is not a retrovirus, making it the first of its kind to be discovered in humans.

Viruses normally act by inserting their genetic information (be it DNA or RNA) into their host, where the host's cellular machinery is required for the virus to live and replicate.  The virus only contains machinery to instruct the decoding of their genetic code.  However, the viral DNA that has been integrated in the human genome is different.  These type of viral insertions occured in our primate ancestors about 40 million years ago when viral DNA inserted itself into the DNA of a replicating cell (enabling it to be copied into daughter cells), and since then these viral insertions secured functions in the human body that are usually quite beneficial.

When viral DNA integrates into the genome, often mutations occur, new genes are introduced, or genes are transposed (copied anew into a second chromosomal location).  If these changes do not occur in our 'coding regions' (or the genes, which code for functional proteins), then these changes could hang around without disrupting the organism, and these processes can allow new gene functions to arise, and through evolution the new benefits will be passed on.

Further Reading:

 1. Great coverage by the lay media on how and why bacteria are living in and on humans:

http://www.scientificamerican.com/article.cfm?id=strange-but-true-humans-carry-more-bacterial-cells-than-human-ones

http://www.npr.org/templates/story/story.php?storyId=5527426

http://seedmagazine.com/content/article/the_body_politic/

Coverage of the Borna virus:

http://www.sciencenews.org/view/generic/id/52925/title/Bornavirus_genes_found_in_human_DNA_

http://www.nytimes.com/2010/01/12/science/12paleo.html?ref=science