Ill try to elbaorate a bit more: A shell is what allows you to ionteract with your OS (Operating system, windows in this case).

The taskbar, start menu, sytray, deskop icons, etc are all part of the default Windows shell, named explorer (not to be confused with Internet Explorer, or Windows Explorer (though it's the same executable, but you can forget about that for now, it's another story))

Litestep replaces explorer. Now litestep, on it's own, does nothing, except load modules. These modules provide the functionality to say, have a taskbar, systray, popup menu, etc (http://www.loose-screws.com/ is a nice module site). That's the whole thing about LS, it uber customizable. You can make everything where you want, how want, and you can do things you would never be able to do in explorer! Check out the themes section to see what people have made, by loading certain modules, and configuring them to do what they want.

I recommend you read lsfaq.shellfront.org, and the sticky topics in this forum. Then, if you decide to install litestep, head over to lsinstaller.loose-screws.com for omar's installer, and read o-t-s.sourceforge.net for info on themes, how they work, how to install them, etc.

Hope this helps.