As defined by Wikipedia, "a hash function is a reproducible method of turning some kind of data into a (relatively) small number that may serve as a digital 'fingerprint' of the data. The algorithm 'chops and mixes' (substitutes or transposes) the data to create such fingerprints, called hash values. These are commonly as indices into hash tables or hash files. Cryptographic hash functions are used for various purposes in information security applications."

In short, hashing is a way to protect data. It is simple, fast, and relatively secure.