Welcome to Geekdom! The ROM is basically the brain of your device. This is where your OS is located, as well as the various files which allow your device to perform various functions. It's job is much like that of a hard drive on a PC. Your device comes with a stock ROM from the manufacturer, in your case, HTC. Many of us will create or "cook" ROMs to enable additional features, save memory, or for other reasons. The program for cooking a ROM is the kitchen, oddly enough. Once a ROM is cooked, you flash it onto your device. If you're looking to get into cooking, review the forum for the HTC Touch. There's a huge amount of info available on cooking your own ROM, how to flash the ROM, and most importantly of all, the precautions you need to take. If you're not careful, you can "brick," or permanently disable your device.
That's the Reader's Digest version. Good luck!
