I haven't used it myself, but I believe it is a cache for surfing the WWW. You give it a certain amount of disk space (say 300MB), and you set Netscape to use it as a proxy server. So whenever you access a web page using Netscape, it will pass the request to squid, and squid will either serve up the page out of it's disk cache (very fast), or if it doesn't have the latest version of the document, fetch it from the internet.
For a single user, this probably doesn't do anything for you that just increasing the cache size inside of Netscape doesn't do. But if you set up several users to use the squid, then this can speed things up considerably, and cut down on the amount of network traffic. A proxy cache also gives you more control over what is cached than what Netscape provides. Of course, there are drawbacks to using proxy caches -- the cache might cache something that it really shouldn't (like the output from a CGI script), and you will not be able to see the latest output. Normally though, this shouldn't happen. How's that sound? - Jim