I apologize for the ambiguous question, but vbulletin has become the classroom in which I'm learning PHP. My question is what is the hooks_vbulletin.xml file? How is it used? Whats gained or lost by adding or removing a <hook></hook> item?

includes\xml\hooks_vbulletin.xml

It will add/remove vBulletin hooks. There are a few articles at vbulletin.org about hooks. Try looking there