Wow, it was really hard to write a description for this program. Anyways, iFaith is an extremely niche application. By which I mean, most normal people would have no actual idea as to what it does. To put it in a simple (but not short) way:

A SHSH blob is a stored piece of info that iTunes requires for you to restore your iPhone's firmware to its original state. Normally, if you try to restore your iPhone to an old firmware, iTunes won't let you. It will force you to restore to the newest version of iOS. If you don't want to upgrade to the newest version (usually because that version isn't jailbreakable/unlockable), you will need to have saved your SHSH blobs beforehand. Instead of having iTunes communicate with Apple's servers to verify the restore, you have to set iTunes to communicate with your SHSH blob, which mimics Apple's approval.

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Normally, if you're saving your SHSH blob with Cydia or TinyUmbrella, it will only work if your iPhone is running the newest version of iOS. To get a SHSH blob, Cydia has to ask Apple's server to sign your iPhone's software. Once Cydia receives this signature, it can save it forever in blob form. However, if Apple is no longer signing your iPhone's software (because it's not the newest version), the whole concept falls apart.

That's where iFaith comes in. It seems that iFaith can get your iPhone's SHSH blob, which mimics Apple's signature, without requiring Apple's signature in the first place. (How they do this, I have no idea.) This way, you can get a SHSH blob for your iPhone's software, even if it's an old version that Apple no longer signs. So say that your iPhone is running iOS 3.1.3 and you don't want to upgrade to iOS 4, but you never got around to saving your SHSH blobs. Before iFaith, you would have been pretty much screwed if your iPhone messed up and you had to restore it to factory settings. iTunes would have forced you to upgrade to the newest version of iOS. However, with iFaith, you are able to save your SHSH blobs for iOS 3.1.3, even though Apple no longer signs that version. iFaith would then let you use these blobs to create your own "pre-signed" version of iOS 3.1.3-- a copy of iOS that can be restored to your iPhone without approval from Apple. Woooo.