What kind of Android do you have?
Rooted means taking off the standard Operating System (Gingerbread, Froyo, or another) and flashing a custom ROM on it.
Custom ROMs allow you to overclock your CPU/Processor, to do things that normally wouldn't be allowed or able to do. Removing apps that are installed by carriers that have no purpose, aren't used, or are a form of spyware (Yes they do put spyware on your phone).
Example of doing things you wouldn't be able to Normally do: I shouldn't be able to have my phone be a WIFI hotspot for other devices, not with out paying for it. I don't pay for it, nor will I ever because I feel that Tmo infringed on my privacy by putting an IP logger/GPS locator/Keylogger on my phone with out my permission.
Android phones are based off of Linux which is an Open Source Operating System (you can customize EVERY feature on your computer, down to how it runs, what it looks like when it boots/shutsdown).
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