Originally Posted by Micro$haft web site

Driver.cab File
When you install a Plug and Play device, Windows XP Professional installs a driver from the Driver.cab file.

Windows XP Professional installs the cabinet file as part of the operating system installation process. The Driver.cab file contains thousands of commonly used files, including drivers, application extensions, and color profiles. These files enable Windows XP Professional to work with a broad range of hardware devices and applications.