Qigong, or chi-kung literally means energy work, the word chi means breath energy and kung means a kind of skillful work. Strictly speaking, qigong encompasses a lot of practices. There is qigong for martial arts, qigong for medical treatments, spiritual qigong, but the most common type of qigong most people are interested in is exercises one does for health enhancement, which may be similar to Tai Chi in appearance.
While there are many styles of qigong, the function can generally be understood in terms of cleansing/purging, gathering/tonifying, and circulating/regulating. The logic is you want to cleanse yourself of negative or stagnant energy patterns before you "gather" or strengthen your energy reserves, and in circulating the energy there is a balancing effect where it becomes evenly distributed so it goes to where it is needed in the body and not too much accumulates in one area and not enough in others.
Another way of breaking down the actual practice of the exercise is the three regulations of breath, posture and intent. While some traditional ways of teaching may only focus on body posture in the beginning, ultimately all three are done simutaneously. While doing qigong exercises, there are certain movements that goes with the inhale and others that go with the exhale, and the specific intent of moving the energy in the body in a particular way is done by way of visualization or simply by using your mind to direct the flow of energy in your body.
Regardless of which style of qigong is practiced, clearly one would want to conciously direct the body's function on all levels and thereby improve and regulate one's health.