The block chain is a transaction ledger of all transactions since the beginning (the genesis block).  It is independently verified by each bitcoin node and protected by cryptographic hashes.  Miners are responsible for packaging transactions into blocks which are then added to the chain.  As a side benefit, the miners get 25 BTC plus the transaction mining fees for each  block they find.

This means that all transactions are public and can be viewed by anyone (go to blockchain.info to see what can be viewed).


For a detailed explanation: http://en.bitcoin.it/wiki/Block_chain