What is Kernel Memory? What function does it serve?

The 'kernel' is the core bit of the operating system - the part that lets you talk to the hardware, the part that actually does the 'operating' as it were.

Kernel memory, accordingly, is reserved for the parts of the operating system that have to stay in memory (which as you can see is comparatively not all that much) and is off-limits to any other software to prevent any accidents from, say, a badly-written app trying to access memory that's in use elsewhere. (Some bits of the OS can be paged, and you see that reflected there, but that's a bit misleading terminology.)

Kernel memory is the memory used by the Windows kernel. It includes memory used by core components of Windows along with any device drivers. Typically, the number will be very small, in the hundreds of megabytes.