It's a signal processor, it basically flattens the signal to start off with a clean slate. However, the Re-Q supposedly equalizes it after it is flattened. It's technically an alternative to not having a head unit, or for people who want to keep their stock hu's but want better sound. It's a must have if you want better SQ in your car on a stock HU as there is no other way really to get around the factory equalization. As you turn up the volume on your OEM HU, it lowers the bass output to protect the stock speakers.
Other companies that make MUCH BETTER versions of the Re-Q, In order from greatest to least.
Alpine PXE-H650 ~ Expensive, but the best one available right now
Rockford Fosgate 3Sixty ~ Almost as good as the PXE-H650, but much cheaper save $$$
JL Cleansweep ~ Still expensive, but only flattens the signal. Would require a seperate EQ to do as the other above units do already.
Re-Q ~ Don't know much about it, except it's like a low-end version of the 3Sixty
Sometime around Fall of 2007 JBL Will be releasing their MS-8 Processor which will blow all other signal processors out of the water that are currently available.