Lens hoods are primarily designed to prevent unwanted stray light from entering the lens by extending and shading the end of the lens. In addition, since the end of the lens is extended you also get the added benefit of some extra protection from accidental impact.
The lens hood folds down and can remain on the lens permanently because it only lengthens the lens minutely in its collapsed state, requiring hardly any additional space in the gadget bag. It is designed to match the focal length of standard lenses (50mm).