Pretty straight forward question. What does a lens hood do?
A lens hood has two purposes - one is to shield the lens elements from stray light - either directly from the sun, from passing cars, from a flash, etc. This stray light can cause lens flare and reduced contrast, so it is best to limit it.
Its also useful for avoiding bumps to your lens or filter. I use mine a lot in the car, because my lens is always very close to the window.
(It can also make that huge telephoto look that much more impressive)