What is EFI?  Or more importantly, what does EFI do?

The new Asus eeepc 1005hab that I got has a hard drive that looks like this:

$ sudo fdisk -clu /dev/sda

Disk /dev/sda: 160.0 GB, 160041885696 bytes
255 heads, 63 sectors/track, 19457 cylinders, total 312581808 sectors
Units = sectors of 1 * 512 = 512 bytes
Sector size (logical/physical): 512 bytes / 512 bytes
I/O size (minimum/optimal): 512 bytes / 512 bytes
Disk identifier: 0x845a4551

   Device Boot      Start         End      Blocks   Id  System
/dev/sda1   *          63    40965749    20482843+   7  HPFS/NTFS
/dev/sda2       302246910   312496379     5124735   1c  Hidden W95 FAT32 (LBA)
/dev/sda3       312496380   312576704       40162+  ef  EFI (FAT-12/16/32)

The machine comes with Windows XP.  /dev/sda1 is where WinXP is
installed.  sda2 has a Ghost image and files necessary to reinstall
XP.  Notice that /dev/sda3 is labeled as an EFI partition.  What does
that mean?

I've been reading about EFI and it sounds interesting, but I can't
find the answers to my questions.  It seems to sit between the BIOS
and the OS.  Is it an extension to BIOS?  Does the machine need the
EFI partition in order to boot or can I remove it?  That is, if I wipe
the drive while installing Ubuntu will the machine become unbootable?
Can I move the partition elsewhere?  Does EFI enable certain hardware
functions and, if so, how do I access them?  Is EFI just an
alternative to a boot loader, e.g. Grub?

What I've read so far:

http://en.wikipedia.org/wiki/Extensible_Firmware_Interface
http://www.intel.com/technology/efi/

Thanks in advance for any pointers that clarify what EFI does and what
I can do with it.

Regards,
- Robert

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