The VS1053 is a multi-format audio codec chip.It can decode digital audio files such as MP3, FLAC, AAC, OGG, and WAV as well as encode audio into digital formats (right now only WAV and OGG are supported for encoding).
For many small microcontrollers, the mathematical calculations for decoding MP3 files are too much effort. That's where you'd use this chip.
All you need to do is stream the raw audio file as you have on an SD or other storage and it will play the stereo audio.
There are some extras with this chip in addition to plain audio playing & recording: there's a built-in MIDI synth with 50 instruments you can play by piping in direct MIDI, 8 GPIO pins, Bass & Treble adjust, and I2S digital output.
Each order comes with a single chip.