PulseAudio is a sound system for POSIX OSes, it is a proxy for your sound applications. It allows you to do advanced operations on your sound data as it passes between your application and your hardware. Things like transferring the audio to a different machine, changing the sample format or channel count and mixing several sounds into one are easily achieved using a sound server.
PulseAudio is sound server for linux proposed to replace OSS. It allows input from multiple applications and perform mixing before forwarding it alsa. PulseAudio provide userlevel tools for more control over audio. PulseAudio is bundled with ubuntu and other linux OS by default.