What exactly is the sh command?

"sh is the bourne shell.

There are several shells, of which bourne is the old standard, installed on all unix systems, and generally the one you can guarantee will exist.

The shell is the command interpreter that takes your input, provides output back to the screen, to the correct files, etc, and provides all the basic built-in commands you need to manage jobs, kill, test expressions, etc.

Your command above is saying to run that shell-script using the bourne shell. Different shells use different syntax, so using the correct shell is a requirement. The first line of the shell should also define which to use: #!/bin/sh says use /bin/sh"