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Please explain to me what a 'hospitalist' exactly does? What residency/fellowship must one do to work as a hospitalist?

A hospitalist is a physician that works directly for a hospital caring for inpatients.  Very similar duties to a 3rd year IM resident, therefore most hospitalists are generally Internal Medicine board certified.  Since the work hour rules, my hospital has started hiring hospitalists and nurse practitioner teams to decrease the IM resident work loads.

A hospitalist is basically an IM residency graduate that hasn't found a permanent practice or fellowship yet.  I think most hospitalists would choose private practice or a subspecialty if they had the choice.  They are compensated fairly, though, and it is a great temporary option.  I don't know of too many people who do it permanently.

A Locum Tenens job is another option if you can't find a job out of IM residency.  That's the great thing about being a doctor - you'll never be jobless (just sleep deprived)...