What about the first part of the question: what are they???
What they are is a digital signature that is normally received from Apple via iTunes during a restore process. It's like iTunes asks Apple, "May I get your signature to approve the loading of this firmware?"
When you go to restore your iPad (or other iOS device) iTunes sends Apple your device ID, and of course the firmware version you are trying to restore. If Apple is still signing that firmware Apple sends back a signature that is only good for that device ID, and that specific firmware. If iTunes gets that signature it loads your firmware and you are happily restoring.
But if Apple is NOT signing that firmware, as is the case now for all iPad firmware other than 4.2.1, iTunes will not load it.
That is where saving the SHSH blobs comes in. Saving, and then using, your SHSH blobs is a two step process.
The first step, which has to occur BEFORE Apple stops signing a given firmware, is contacting the same Apple server that iTunes would be contacting and giving it the same information as iTunes would. Apple dutifully replies with the signature. This signature is then saved, ready to be used if needed by the second step of the process.
This is your saved SHSH!
You can save the SHSH blobs using the Cydia app, the aforementioned dedicated app, or by using TinyUmbrella on your computer. This is the process that gets the signature from Apple and then saves the result.
The second step is the reverse. Now the job is not to fool Apple into thinking it is getting a request from iTunes but rather to fool iTunes into thinking it is getting a signature from Apple--when in fact it is contacting a different server than Apple's, which behaves the same way. But since we already have that saved SHSH signature, that server dutifully complies and sends it back to iTunes. iTunes is happy and restores. The result is you can now load firmware that would normally not load.
When it comes time to restore a firmware no longer being signed you can modify your computer's hosts file to redirect any requests to Apple's signing server to Cydia's server. Or you can use TinyUmbrella without having to mess with editing any hosts file.
Hope this helped make it clearer to someone!
Michael