Cygnos360 is a chip that allows you to have more than one kernel version on your xbox 360. Currently users can only have either a kernel version (4532 or 4548) OR the current kernel version that is neccessary to use xbox live. Cygnos360 enables you to conveniently switch between your "live kernel" and your "homebrew kernel".
You can also use Cygnos360 to switch between PAL and NTSC kernels.