The kernel of an operating system is the part responsible for all other operations. When a computer boots up, it goes through some initialisation functions, such as checking memory. It then loads the kernel and switches control to it. The kernel then starts up all the processes needed to communiate with the user and the rest of the environment (e.g. the LAN)
The kernel is always loaded into memory, and kernel functions always run, handling processes, memory, files and devices.
The traditional structure of a kernel is a layered system, such as Unix. In this, all layers are part of the kernel, and each layer can talk to only a few other layers. Application programs and utilities live above the kernel.