The name derives from the fact that its curved shape resembles that of a sea horse (Greek: hippocampus).
There is substantial evidence (from animal studies and from patients with brain injury) that the hippocampus is crucial in the conversion of short term memory into long memory, though it is not yet clear how this occurs. Individuals whose hippocampus becomes damaged (for instance, those with Korsakoff's syndrome), whilst retaining the ability to access long-term memories from before their injury, become unable to form new ones. They can, however, learn new skills (such as playing a musical instrument) but will be totally unable to remember how they gained those skills.
There is also evidence, that the hippocampus is involved in storing unique information, as for example locations. Without a fully functional hippocampus a person may no more be able remember the places he/she has been to and how to get there. London's cab drivers on the other hand, who are required to learn a large number of places and locations, are well known for developing a big hippocampus. The hippocampus seems to grow when storing more information, as many regions of the brain do. (Although nobody knows whether these cab drivers have trained their hippocampus to this extent, or just a person with large well-developed dorsal hippocampus have more chances to become a taxi driver.)
It is because it attacks the hippocampus first that Alzheimer's disease is first discovered by the patient's memory loss.
In Greek mythology, the hippocampus (horse-like sea monster") was a mythical monster, half-horse, half-sea-monster. One of them pulled Poseidon's chariot. It looked like a horse with the rear part resembling a fish or dolphin.