Yes kind of a "crack" in the game, there is various types of mod(ify)s to a game, I use them mostly to guide my playthrough so I use the least time in a game while enjoying most the content I can (that I enjoy). There are WT (walkthrough) mods that give you hints and information on the game choices or that even able you to chose more than 1 choice so you watch more than 1 outcome (also a cheat mod itself when does that), there are gallery mods that unlock the video/image galleries or even add a gallery when the game itself doesn't have one. There are cheat mods where you can modify the stats ingame or variables, there are mods that add useful game settings and then there is multi mods that do 2 or more of those options like this one and the ones KoGa3 usually make. There is also audio mods that add additional music (KoGa3 also does that in some mods) or enhancement video mods that raise the quality of renders/animations. So basically something that modify the original version of the game to enhance your playing experience. There are plenty of different kind of mods, there are even universal mods but I avoid those usually, prefer use "Author" mods made exclusively for a game like this one.
Yes they usually add files or replace files in the game folder of the game but always better to read the installation information/tips of any mod you will use. Try always to read the features that a mod adds, in this case you can see all this information on the OP in the spoilers.
Edit: My favorites usually are mods like KoGa3 does. Multi mods, they are very flexible usually and it is always up to you what features you want to turn on or off. They are a must for me in any AVN.