Alpha showed you the new-style Kernel Panic, which comes up in 10.2 and later versions.
There is also an old-style Kernel Panic, which dumps a whole lot of ugly white text on a black background onto your screen. This is supposed to only appear in 10.0 and 10.1, but I once managed to get an old-style panic on 10.2.
A Kernel Panic usually happens when something inside the kernel gets so horked that it doesn't even know how to recover from the error. So, it panics and stops everything so that things won't get worse. It's fairly analogous to the Blue Screen of Death in Windows, or the System Bomb in OS9 and below.
These are usually rare on Macs, and almost always the result of a hardware problem. If you get one, you'll find a bunch of information in /Library/logs/panic.log; paste the last entry (they're all dated) up here. Many of us have learned to read the info, at least enough so that we can figure out what device went wrong.