Tech TV articles on moding your XBox, general info, has some good links.
http://www.techtv.com/unscrewed/ihateyou/story/0,24682,3544856,00.html
One of those good links is this site, looked through it a little, looks like some good info on there too.
http://www.xbox-scene.com/
As far as I know the XBox mod chip simply lets you played copied games and lets you use other utilities, install 'programs' on the XBox. These programs allow you to do things with your XBox, such as mirror games on your HD or a media player for instance.