Rainbows are the product of light scattering through raindrops. The raindrops have a semi-spherical shape that spreads white light out into its constituent colors, producing a prism. A raimbow will always appear 180 degrees from the direction of the Sun or other light source.
Rainbows are particularly prevalent here in Hawaii due to the very localized weather systems (it can be sunny on one side of the island of Oahu, and pouring on the other, or even from town to town). I've even noticed rain clouds that nearly sweep over the ground! Very bizarre.
In Hawaii, rainbows are called Anuenue.