Need a modchip explained

Hook this thang up, and you can play backups and homebrew off of DVDs.
You cannot swap the DVD drive for an HDD with this modchip.
It's basically a chip(s) that connects to the LPC header and overrides the XBOX BIOS with its own.

You can play *backups*, run homebrew, and replace the HDD and DVD drive. There are certain things you have to do to replace the HDD though.
Get a relatively modern one. I don't think they are sold anymore, but some of the older ones are incompatible and difficult to install. There's information on a bunch of different modchips on the XBOX Scene website.

Also, a modchip will do everything a softmod does and more.
The Xecuter 3 is probably the most popular but the SmartXX chip will do fine. The 5th gen and "most advanced" is BS, but it will do what you want. It should come with instructions.
The SmartXX is newer and will do a better job I think, but the Xecuter 2.6 will work too.
You could just buy a DuoX2 for $10....

You don't need an expensive chip if all you want to do is play copies or homebrew/emulators.