tis a life saver - and in teh SEO world - i strongly advise using it for the mod rewrite (if your on apache that is)
.htaccess is a file placed along with other files and folder on your server.. It basically helps in several wayz.. it reworks complicated urls and helps your visitors.. see a simple URL.. A large number of ppl use it for redirecting purposes.. Basically, an .htaccess helps you specify a particular URL on which you can tell the server, the content to be displayed from another page.. FOr eg.. if you type www.yourdomain.com/xyz/ it can display the same content that is displayed in www.yourdomain.com/index.php?c=1 1. This helps you get rid of the junk characters like "?", "=", etc.. which are hated by Search ENgines 2. It makes your URls esy to read and access for your visitors..
To me, the .htaccess is a file that the apache webserver looks for everytime it serves a file . You can use it to control how apache handles particular url requests. eg. password protect folders, redirect requests, rewrite the url that was requested for, block certain referrers, and so on...