It carries the video signal from your PS2 to your TV in a different manner. It's natively of higher quality than SCART, although the cables are more expensive and there's less support from the TV manufacturers. Most TVs that have S-Video inputs have them on the front of the TV for camcorder users, but that's not great for people looking for a neat setup with unobtrusive wiring.
Hi Larzzon : I found a good deal on the "Monster Cable" S-Video set-up so bought one. I knew ahead of time not to expect much difference on TVs smaller then 32" (I was playing on a 27" @ the time.) Where S-Video really shines is when I plug it into my nephew's 58" Sony!!! Quite a difference from the standard PS2 Cable. IMO: Don't waste your money if you dodn't have a large screen TV...UB57