Your head gasket is what goes between the mating surfaces of your cylinder head and block, sealing the two and allowing for compression. The head gasket also prevents oil or coolant from making its way into the engine's combustion chambers.
When a head gasket fails, it's almost always due to overheating and can be diagnosed by the presence of coolant in the motor oil, steam in the exhaust, or bubbles rising up through the radiator when the engine is running. And, more often than not, your engine overheated either because the coolant level was low or because your coolant had been neglected for so long that it broke down and lost its ability to protect the engine.
A blown head gasket is a real problem, and it means an expensive repair. For an older vehicle, it usually means the end of the line for the engine.
Let's let Dr. Coolant (John Force) explain a bit more about blown head gaskets.
Shop Head Gaskets.