Hi. Ya it's basically another reservoir of water. Usually there is a siphon (gravity fed) flow of water into the sump, and then a pump in the sump itself that will pump the water back up into the main tank. Depending of what type of set-up you have (tropical, marine, reef etc.) you will find differences in sump design and contents. You can use the sump to do the filtering through different materials, you can put your heater or a protein skimmer there so they are not visible in the main tank. In a freshwater set-up you would likely use one for filtering and maybe hiding the heater, but i would say it's a bit overkill on the average system. I believe people with the reef saltwater aquariums use the sump to grow the beneficial microorganisms that help do the filtering. Because they are in the sump, the critters in the main tank can't get to them to eat them. Having the sump also increases the total volume of water of the whole system thereby allowing more fish in a smaller space.
That's the basics really. I'm sure there are other uses as well. But you're right, they're just another reservoir of water.