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What, exactly does a catalytic converter do and why do I have to use unleaded gasoline?

A catalytic converter takes exhaust gas from your engine and converts it to as innocuous gas as possible (mostly CO2 or CO with the occasional NO or NO2). This process happens naturally, but the palladium in the "cat" accelerates this process and converts a higher percentage to "cleaner" gasses. If you use leaded gas in a car with a catalytic converter, the lead that is used in the combustion process and then shot out the exhaust and through the "cat" will "bind" to the palladium and render the "cat" useless. There's a complex reaction when palladium and lead mix that causes the two molecules to attach to one another and prevent the palladium from doing it's job, catalyzing the exhaust gas from the engine any further. It only takes a few minutes of running leaded gas through the engine of a car with a "cat" to render the "cat" useless. Hope that helps!