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The Hopper is a block added by the BuildCraft mod. The Hopper is used to essentially "extend" or "increase" the internal storage capacities of certain blocks, such as engines, furnaces, and dispensers. The Hopper has a 4 slot inventory and connects to the top of certain blocks, no matter where the usual "input" side of the connected block is. The hopper can only be placed on top of a machine. Items can be placed in the Hopper either by right clicking on it and placing items in, or by a pipe feeding from the top. The Hopper's inventory accepts item stacks.
When the inventory of the connected block can accept any of the items in the Hopper (if there is room, or if an item stack in the Hopper is the same item as the one in the connected block's inventory), the Hopper will put that item into the block's inventory.
By stacking multiple hoppers on top of one another, a player can increase the inventory of an item as high as you can stack hoppers, as hoppers will feed into hoppers below them.