This system process indexing and updates lists of the files on your system, so you can search for them quickly, but it's completley unnessesary.
To disable it, go to the Control Panel and click Add/Remove Programs. Click the Add/Remove Window Components. Simply unclick the Indexing services and click next!
Indexing service creates a database index of all files on your system when the system is otherwise idle. Unless you do frequent searches, it is suggested you disable this service.