The ClockworkMod recovery is what makes it possible for millions of Android users all over the world to install their own custom ROMs in a pretty user-friendly way. Every phone has basic recovery software installed on one of its partitions, to perform some simple tasks, but the CWM recovery can replace that stock recovery and can offer you some more advanced functionality.
That includes being able to back-up and restore a ROM, to install a different ROM on the phone, or to partition the microSD card. For example, use the Link2SD app to make your phone use a microSD partition as its default “internal storage” for apps. This gives the benefit of using 512 MB, 1 GB or more, for your apps, instead of the measly 150 MB you usually get on lower end phones. Google should really force manufacturers to give at least 1 GB of free space to users of such phones, so this won’t be necessary anymore, but that’s whole different topic we won’t discuss here.
The ClockWorkdMod recovery has been by far the most popular recovery for custom ROM’s, and its developer Koushik Dutta is already working on version 6.0, which is now in alpha stage, and promises to bring new improvements such as much faster back-ups of your ROMs (4-5x faster), and smaller sizes for the incremental back-up files. It’s only 15-20 MB now for an additional back-up of a ROM, so it will save you space on the microSD card.
Right now you can only get these alpha builds for the Galaxy Nexus, but it should support a lot more devices by the time this version gets stable: