In the SQL:2003 Standard, access to the data dictionary (or database metadata) is provided by a structure called information_schema. As this is part of the Standard, and already exists in other database systems, the decision to implement this feature into MySQL was a very good one.
MySQL has added some information that is not part of the standard, for example, INFORMATION_SCHEMA.COLUMNS.COLUMN_TYPE. Be aware of the fact that if you use this information in a software project, it might not be portable to other SQL implementations.
A phpMyAdmin user sees the information_schema as a normal database containing views. These views describe many aspects of the structure of the databases hosted on this server. The following screenshot shows a subset of what can be seen (and in fact, the only possible operation on this database is SELECT):

Internally, phpMyAdmin can call the information_schema, instead of the corresponding SHOW statements to retrieve metadata. This behavior is controlled by the $cfg['Servers'][$i]['DisableIS'] directive. Some SELECT operations involving a WHERE clause on information_schema are really slow (many minutes of wait time) when the server hosts hundreds of databases or tables, and this is yet to be fixed by the MySQL team; this is why this directive is set to true by default, thus avoiding the use of information_schema.
The $cfg['Servers'][$i]['hide_db'] parameter can be used to hide this "database" to users who might be confused by the sudden appearance of a database that they know nothing about. It will probably depend on their level of expertise in MySQL. On a multi-user installation of phpMyAdmin, we cannot please everyone about this parameter's value.