A LLC (or Limited Liability Company) is a form of business registration that offers company owners some of the benefits of a corporation without actually having to register a corporation. Owners or shareholders of LLCs are actually referred to as "members." The biggest benefit would be the limited liability provided to the owners/shareholders over that of a sole proprietorship or partnership. In the event of something occuring, it would be the company that would need representation in court rather than the "members" being held liable for example.
It's recommended that you register as an LLC if you are conducting any sort of risky business, especially in fields such as Web Hosting or businesses that conduct micro transacions (less than $5) through merchants frequently and in large scale.