The iPod Photo is like any other iPod a music player made by Apple. It was the first iPod with a color screen and the ability to display photos and slideshows on it's screen or on an attached TV screen. There was a version with a 40 (later 30) and a 60 GB hard disk.
An iPod Photo, obviously, plays music. Beyond that, it allows you to bring your photo gallery with you and view them on the go. You can also play simple games.
An ipod Photo functions like all other previous ipods with the exception that it can store and view photo files. So it plays music, games, shows time, and displays photos.