h-index is calculated based on the citations received by your publications. If 5 of your papers are cited by at least 5 times by others, your h-index will be 5. Nowadays, the h-index plays a vital role to judge the impact of a researcher's contribution. More over, it plays a pivotal role in promotions, award of projects, etc.
I just like to add that to have a good 'h'-index one needs both -number of publications as well as number of citations. If you really want to have h-index 100 than you must have at least 100 number of publications ! The problem of the h-index is- it does not consider high number of citations in one individual paper. Example: two authors who are having same h-index but one author might have at least one publication which might have cited more 1000 times whereas such is not for another author with same h-index !