An Application Launcher Is A Third-Party UI Program...
Aftermarket app launchers are essentially replacement home screens — they take over the duties performed by the factory UI — and they're generally aimed towards intermediate to advanced users looking for additional customisation options. Given the Android system's existing propensity for customisation, a large majority of the app launcher programs are coded for that OS — Launcher Pro, Go Launcher EX, and ADWLauncher EX being among the most popular. iOS devices generally need to be jailbroken in order to take advantage of a third-party launcher, however, once broken, the Cydia Store does have a decent selection of them. As for Windows Marketplace, well, not so much.
...That Replaces The Native Home Screen...
App launchers, with some variation depending on their feature set, basically handle every function that the native UI used to do. They manage the home screen, wallpaper, launch bar, app installations, shortcuts and widgets.
...With A Faster Loading And More Customisable Interface.
These launchers, unrestrained by corporate bigwigs and encroaching launch dates, have been optimised for peak performance. They often feature better response times, faster and cleaner screen transitions, and memory-consumption tweaks to squeeze every last bit of performance from slower handsets.
As for features, they often include a wide variety of skins, icons and themes, they allow you to customise widgets, and they can create animated transitions between multiple home screens. In short, the user just gets a lot more control over the interface of the phone's operating system.