Basically its a rendered area thats projected where the sky is. the designer makes a tiny little room someplace, stick whatever they want in there, and it'll be projected as the sky. I suppose you can liken it to a backdrop for movies, but in a map.
it can be made to move or not with the player, changing field of view or position, to give (or fake) a sense of proportion.
http://www.shadowspawn.net/beta/quake3_mapping_skyportal_tut.htm is a tute I made on them, has allot of info on it.
