Since the questioner also asks "why are two needed" and the other answer didn't address that:
Early shuttle missions flew a "standard insertion" ascent. This required two burns of the Orbital Maneuvering System after the main engines shut down and the external tank was jettisoned. The first burn (OMS-1) raised the apogee of the orbit, and the second one (OMS-2) circularized the orbit by raising the perigee.
For STS-41C and subsequent1, "direct insertion" ascents were flown. The trajectory was shaped so that a higher apogee was achieved on the main engines, and only the OMS-2 burn (it retained that name) was required.
1Vikki pointed out in a comment that some "standard insertion" missions were flown after this: STS-41D, STS-41G, STS-51A, STS-51B, STS-51F (planned, ATO instead), STS-61A, STS-61C, STS-51L (planned, never got there), STS-30, and STS-38.
These graphs from the Shuttle Crew Operations Manual show the performance advantage of direct insertion missions.
Incidentally, "direct insertion" implied that the external tank was released into a higher orbit and it flew a lot further around the Earth before reentering, than it had for the standard insertion missions.
The OMS (and the aft Reaction Control Systems) were contained in pods on either side of the Orbiter's vertical tail.
Here is a cutaway drawing of the pod, with some pertinent info, from the 1982 Space Shuttle Press Reference.