A modchip (acronym for Modification Chip) is a hardware chip that has to be installed in the Wii.
By doing this, your wii will be able to play disc backups (both Wii and Gamecube in most cases) from the disc channel at full speed (6x).
The only advantage over a softmod is that the games will read at their normal speed (6x) instead of half speed (3x) for backup launchers, and its 100% compatibility.
But even so, this is not a really big advantage
USB loaders have higher speed than 6x
Softmod has 99.9% compatibility with games as well
One of the frequent problems with Modchips is that they can be blocked by a system menu update. Be sure to update your Modchip Firmware frequently !
The newest modchip is called the WODE jukebox, which can play Wii and gamecube backups from Disc and USB (making it the ONLY way to play Gamecube games from an HDD).
Will this guide work with modchipped Wii's?
Will the modchip conflict with some of my homebrew.
A modchip will not conflict with ANY homebrew.