It's a medicinal product, refined from an ingredient called moon sugar, that has different effects depending on where it is made; some will restore your stamina when taken, while some others will instead damage your intelligence in exchange for greatly fortifying your strength and speed. For the latter kind, you can achieve an extraordinary degree of speed by slamming down 8 shots. Skooma has the latter effect in Morrowind and Oblivion, while the Skyrim version just restores stamina. Lorewise, this is explained as Skyrim having watered-down skooma.