PHP Lib is a collection (or 'library') of interfaces, classes and functions that are used by a variety of Islandora modules, most notably the Forms modules. It is used primarily to create pages that convert records in XML formats to a more human-readable version that is also able to be easily manipulated. This is done by a series of PHP files that Drupal includes when loading these pages.
PHP Lib has no dependencies, but also has no functionality as a standalone module.
PHP Lib is part of the Islandora Forms package, downloadable at the https://github.com/islandora/php_lib page.
PHP Lib requires no configuration, and functions as soon as it is activated and installed as a Drupal module.