Core idea

Let AA be a and IAI\subseteq A an ideal. Its II-adic completion is the inverse limit

A^I:=limn1A/In\widehat A^{\,I}:=\varprojlim_{n\geq1}A/I^n

with respect to the quotient maps A/In+1A/InA/I^{n+1}\to A/I^n. The canonical map

AA^I,a(amodIn)nA\longrightarrow\widehat A^{\,I},\qquad a\longmapsto(a\bmod I^n)_n

has kernel nIn\bigcap_n I^n.

What an element records

An element of A^I\widehat A^{\,I} is a compatible system (an)n1(a_n)_{n\geq1} with anA/Ina_n\in A/I^n. It records an element to every finite II-adic order, whether or not one compatible representative already lies in AA. The completion carries the inverse-limit topology with kernels

ker(A^IA/In)\ker(\widehat A^{\,I}\to A/I^n)

as a neighborhood basis of zero; it is complete and separated for this topology.

Important general-ring caution

In well-behaved settings, such as a with any ideal II, the inverse-limit topology agrees with the IA^I\widehat A-adic topology and the completion operation is idempotent. For arbitrary non-Noetherian rings and non-finitely generated ideals, these assertions can fail. Thus “A^\widehat A is complete” should specify the inverse-limit topology unless hypotheses identifying it with the are available.

Examples
Geometric role

Completion along an ideal keeps all infinitesimal neighborhoods of the closed subscheme cut out by II. Its formal-geometric avatar is the Spf(A^I)\operatorname{Spf}(\widehat A^{\,I}).

References
  1. The Stacks Project Authors, “Topological rings and modules.” Section 15.37, Tag 07E7. Relevant: completion and the distinction between limit and adic topologies.
  2. Hideyuki Matsumura, Commutative Ring Theory, Cambridge University Press, 1986. Relevant: Section 8, completions and the Noetherian case.