In Microsoft SQL the data goes through a transaction log file before it get written to an actual data file. The transaction log is reset after a full database backup and a transaction file is backed up. The purpose of the transaction log file is so that you could have up to a millisecond recovery if for some reason something could go wrong with your database or the database server.
If you have a lot activity in your database, the transaction log file will grow in hundreds of megabytes or gigabytes. I have seen databases sizes to 400MB and its transaction log file up 30GB. If your transaction log file is big then your database server may get slower and eventually will run out of resources.
Here are some commands to help shrink the transaction log file.
MSSQL 2000 and MSSQL 2005
BACKUP Log DatabaseName WITH NO_LOG
DBCC SHRINKFILE (DatabaseName _Log, 100)
Alter Database DatabaseName Set Recovery Simple
DBCC SHRINKFILE ('Databsename_log', 1)
Alter Database DatabaseName Set Recovery Full