Every user account created on a local machine will have a Sites folder located in the user's home directory. It is essentially the location for a personal web site hosted on the local machine. If you go to System Preferences->Sharing and click on the Services tab, you'll see a service call "Personal Web Sharing." The Sites folder is used when this service is enabled. Once enabled, other people on your network can access your personal web site by typing the following convention into their web browser:
http://your.ip.address/~<usershortname>
If you remove the entire Sites folder, then users trying to reach your enabled web site will get an error message in their browser indicating that the site can't be found. The content you see within the Sites folder are items to give a default home page for your personal web site. If you remove or modify these items then the user will see the result of those modifications (or deletion)when they try to access your site with a web browser.
Hope that helps,
TK
