It works as a collaboration of many different tabs that represent different properties which join together to add unique effects to objects.
You start off adding inputs and joining them all together. When that's done, you join it to an Output tab and the effect will take effect in the render.
The Node Editor screen is useful for when you want to do more complex, such as combining Shades which are different types of shades you can add to the surface of an object. For example, you can mix the Diffuse with the Glossy shade together. With one being smooth and flat while the latter is shiny and glows. Allowing you to mix the 2.
