This is the application through which you install your first Recovery - ClockworkMod - once you've rooted your phone. This app is a must have! Go to the Market, search for ROM Manager, download & install it. Now run the application. There's a pro version as well, which enables features such as ROM Update, ROM Downloads... If you want to enjoy all the features and also help the developer for his effort, consider downloading the pro version. The app is developed by Koush, who is also the creator of the ClockworkMod recoveries!
Download ROM Manager from Android Market HERE
Download ROM Manager as well as recovery images from developer's website HERE
Now, let's discuss about the application's features. You should have an established wi-fi connection, since you're going to need it.
Flash ClockworkMod Recovery - This allows you to flash the latest version of CWMR available. It's pretty straightforward, no need to explain any further, I guess. Once you have CWMR installed, this option will allow you to update it once a new version comes up -- but that's not as frequent as you'd want. Latest version of the recovery until now (on most devices, at least) : 18.104.22.168.
Reboot into Recovery - Does what it says...
Install ROM from SD Card - Select the .zip you want to flash (ROM, add-on, mod) and... you know the drill.
Download ROM - There are the most awesome ROMs for your model. There's no guarantee that all of them are up to date, but CyanogenMod, Superuser and Google Apps definetly are! Going for the premium version of this app grants you access to CyanogenMod Nightlies and roalex.
ROMs - there are more than the eye can see here :)
Check for ROM Updates - Does what it says, given the updated version of the ROM you currently are HAS been uploaded to ROM Manager.
Install from QR Code - Downloads and installs a ROM off a QR code. Kind of useless, if you ask me.
Manage and Restore Backups - Does what it says. NANDROID backups, that is. Same thing goes for Backup Current ROM.
Fix Permissions - This fixes permissions for installed apps (that includes system). Should resolve random Force Closes or hangs... I suggest you do this regularly -- once a week or so. Please note that this MAY resolve Force Closes or hangs. There's no guarantee that the errors a specific app is giving are permissions-related, so...
Partition SD Card - Partition your SD card with a (up to 512 MB) EXT3 partition. We'll cover this topic in a new post, tomorrow.
All ClockworkMod Recoveries - Allows you to flash an older version of CWMR. I don't reccomend you do this, unless CWMR 22.214.171.124 is NOT up for your device yet.
There is a video walkthrough explaining ROM Manager better than I did here... I just stumbled upon it, on YouTube. It's made by pocketnow, a trusted smartphone review website.