Fr. Guy over at Shouts in the Piazza, had a great explanation in his blog entry last Monday (the day the Chrism Mass is held here in Metuchen, as well as other dioceses around the U.S.):
The Mass of Chrism comes once a year to your cathedral. If you've never attended it, you're missing one of the most solemn and significant liturgies of our church. During the Mass, your bishop will bless the oil of catechumens, the oil of the sick, and the oil of chrism. We use the first for adult catechumens and infants, the second for anointing the sick, and the sacred oil of chrism for baptism, confirmation, the ordination of priests and bishops, and the consecration of altars. All three are basically an olive oil; chrism spices the air with the scent of a perfume, traditionally balsam. For pastoral reasons, another vegetable oil and perfume may be used.Since the bishop is the only one in the diocese who may consecrate chrism, this Mass highlights his ministry and our union with him. He will not baptize and confirm everyone in the parishes of the diocese, but he will be symbolically present in the chrism which the priests and deacons will use. In recent years, this Mass has also celebrated the institution of the priesthood by Christ. It invites the priests to renew their commitment of service and to receive the prayers and support of the people. The Mass of Chrism gathers the faithful of the diocese at their mother church with their shepherd and his closest collaborators in ministry to prepare for celebrations of Christ in all our churches throughout the year.