AirDrop allows you to share files with other computers which also have AirDrop installed using Wi-Fi (uses ad-hoc if not connected) or wired network.
AirDrop only is active and shares files when you have the option selected in the Finder window and will stop sharing as soon as you deselect it or close the Finder windows.
As you can see from the image the AirDrop Icon will change and give you visual feedback if it is running or not. The active icon is animated with a circular sweeping motion which reminds me of a sonar display.
AirDrop can be considered a security risk and can be completely disabled. If you wish to disable (or enable) open the Terminal Application (located under Applications/Utilities) and type in the following commands.
defaults write com.apple.NetworkBrowser DisableAirDrop -boolean YES
defaults write com.apple.NetworkBrowser DisableAirDrop -boolean NO
You will need to Restart, Log out and back in or relaunch the Finder from the Force Quit application (from the Apple menu or Opt+Cmd+Esc). Once disabled the option will be removed from the Finder side bar.