DMOZ, also known as The Open Directory Project (ODP), is a large, categorized directory of websites and pages, which is staffed by volunteers. Every website and page that is added to the directory has to be manually reviewed before it is included. Being listed in the directory is free.
A listing in DMOZ creates two significant links into a website - one from DMOZ (Google spiders DMOZ just like any other site) and one from the Google directory. Both of these usually have decent PageRank. Then add the links from the thousands of small sites that have downloaded and use the DMOZ directory, and you can see why it is usually quite beneficial for a website to be listed in DMOZ. Simply being listed in DMOZ can take a website from a Toolbar PageRank value of 3 to 4, and even from 4 to 5.