What is it?
Service Host Process - svchost.exe

What does it do?

Here's a direct quote from MS about this: (source)
Svchost.exe is a generic host process name for services that are run from dynamic-link libraries (DLLs). The Svchost.exe file is located in the %SystemRoot%\System32 folder. At startup, Svchost.exe checks the services portion of the registry to construct a list of services that it needs to load. There can be multiple instances of Svchost.exe running at the same time. Each Svchost.exe session can contain a grouping of services, so that separate services can be run depending on how and where Svchost.exe is started. This allows for better control and debugging.

Svchost.exe groups are identified in the following registry key:

HKEY_LOCAL_MACHINE\Software\Microsoft\Windows NT\CurrentVersion\Svchost

Each value under this key represents a separate Svchost group and is displayed as a separate instance when you are viewing active processes. Each value is a REG_MULTI_SZ value and contains the services that run under that Svchost group. Each Svchost group can contain one or more service_names extracted from the following registry key, whose Parameters key contains a ServiceDLL value:

HKEY_LOCAL_MACHINE\System\CurrentControlSet\Services\Service