In a nutshell svchost.exe is a method used by Microsoft to share DLL's (Dynamic Link Libraries) which need to be launched via an EXE (Executable).
In Vista and Windows 7 you can right mouse click on any of the svchost.exe entries (there will be more if you click on show processes for all users) and click to view the associated services.
Or you can open a DOS prompt (which also works in XP) and type 'tasklist /svc' (without the quotes) to see what services are hidden behind each svchost entry
Some viruses pretend to be svchost too but they're often spelt slightly differently.
There's a great article about this which explains it in more detail, just click on the link below.