Chillers work with the same basic heat exchange principles as your refrigerator. The chiller "box" doesn't have a motor so it can't pump water through it. What people do is attach it to their external canister filter which has a motor. So water from the tank goes into the inlet of the filter, then the outlet of the filter goes to the inlet of the chiller, then the outlet of the chiller goes into the tank. So just put your chiller after your filter (never in front of it!) and before your tank. The chiller has a thermostat and it turns on when the temperature is 1 degree F higher than the set temperature. For some people the peace of mind the chiller brings in locations prone to heat waves is worth the price.
As far as chillers are concerned JBJ makes the best, in my opinion. The Artica series is neat-looking, relatively quiet, and chills water fast. So far my water has not been more than 1 degree higher than the set temperature (67 deg. F). They are pricey at about $500 for 1/10th HP (horsepower) new. But you can get a slighly used one on Craigslist for half that price if you are diligent at checking. Just make sure if you get a used one to run clean dechlorinated water through it with a water pump for 1-2 hours before using it on your tank. Most likely, used chillers came from a saltwater setup where their use is prominent.
If you want to know more about chillers, just do a quick and simple google search or read on saltwater forums. Many people on this forum find that the ice block method is cheap and effective so that's why they are recommending it to you.
Well like I said I'm not home during the day to change the ice blocks. When I look at pictures of aquarium chillers i just see this box thing and that's it. What is the thing hooked up to and how does it work?