Wow, I'm the first person to jump all over this question.
A Kernal is the core of your operating system. When you're using linux, you can recompile the OS at pretty much any time you want to, and make changes to the very lowest level functions the OS uses. This is why linux is so powerful: It's configurable in a bazillion ways, and all you need is time. I'm sure any search engine can point you toward some links that will give you a more in-depth look at kernal configuration.
