alot of windows "services" (daemons to *nixfags) are implemented as DLLs. svchost.exe "service host" is the application that's called to take these service DLLs, load them up and actually run as an application.
When you start killing random svchost instances, you're hard-killing windows services. This could be your audio manager (in your case), WPA key manager, wifi AP auto-enumeration service...countless things.
using services.msc is a good idea for cutting down on use. also, msconfig is a good tool for disabling what services and programs load at startup. finally, look up what a bare-bones windows install should have as it's running processes, and individually google any remaining processes you have active to discover their nature (certain machines need stuff like mouse driver managers, etc, to function properly even though they're not part of a bare bones windows process list)