They have been mostly killed off now yes, they are not as popular as say the 90’s, when it was all about IRC networks with 1000’s of rooms. They have been replaced with skype, msn and other messanger services now.
The way it works, is basically you have a room that has a name, and the room has a topic. Some times the name and the topic are related, some times not. There is a list of names usually, the people in the room, and then you have users, voiced users, half ops, ops, and some times even ircops. Each has more “power” than the last. Ranging from people who can talk in the room, right up to people who can ban people from the room, all the way up to people who can shut down the entire network.
You go in to the room, and you have a chat, some times about the topic, other times not. Some are used to download music, or share info, or even just play trivia games.