stef25, this is known as key stretching, as others have already explained elsewhere in this thread. Essentially the idea is to make computing the final hash of the password slower by iterating the hash function many times.

This additional slowdown is unlikely to be noticed by a user during an interactive login (hashing the password may take 1ms instead of 1us -- an imperceptible difference to a human) but it dramatically slows down the speed at which an attack can compute hashes to try and recover the password for a leaked hash. It also increases the amount of storage space required for (a naive implementation of) a rainbow table since the attacker would need to store the output for 1, 2, ..., n iterations of the hash function.