When added to an XBOX, a modchip enables the XBOX to boot to a user defined BIOS. This is a customization for your own personal equipment for personal use. It is up to you to make sure that you follow all laws. Modifying your own equipment should not be against the law, but what you do with it can be. I am not a lawyer and am not giving you legal advice. Every modchip shares the feature of booting up some BIOS. Many modchips have other features like LCD support and the X3 Modchip has a development team that creates the X3 BIOS which has tons of features which make it very useful and a pleasure to use.

a chip, usually soldered to the motherboard that enables the Xbox to run unsigned code (homebrew applications like Evolution X, Xbox Media Player, DVD-X etc)

a hardware chip that can be used with gaming consoles to achieve any or all of the following things