Its game story files that are downloaded from game server.
Helps you play game when offline, on machine with no internet connection.
Need to unzip in <my documents>\Eek\House Party folder.
Would also be useful in situation where you have 0.11.3 version of game, but official support is dropped and there is no way to download story files from game server, and you are curious how game looked like long time ago.
As for example, find 0.6.5 version of the game (to see how it looked when it was first time released on Steam, and got huge media coverage) and try playing it now, without finding Mods file for that version. It ain't gonna happen.
This should probably be updated to include latest Mods file. It's waaaay outdated.