Spelljammer is basically FANTASY PIRATES IN SPACE with shitloads of strange stuff, like elves that have symbiotic weapons, mechanical gnomes and anthropoid hippos obsessed with dakka.
It is an interesting setting (at least when compared to anything else from AD&D), but people have been trying to drag it into Dungeons & Dragons 3rd Edition since 3e came out. Blibs and blobs from it have shown up in 5e, with a couple of supplements including tidbits of lore and some iconic monsters from the setting into the game. According to the 5e development team, this was just a nod, and that we shouldn't think about Spelljammer so much. But, why would the writers be up to such trickery?
Unique creatures include space whales, space squid, space dragons, and, of course, giant space hamsters. However, in terms of sapient races, the setting also features the first playable lizardfolk, who get smarter when their eggs are warmed up by the sun in space, the Dracon, a race of Lawful Good dragon-centaurs with European-esque dignity culture and hilarious racism, the Arcane, a race of magically-advanced, mysterious aliens who created the spelljammer and sell its secrets to anyone who'll pay, the Giff, a race of explosion-loving hippo-men and consummate mercenaries, the Scro, a lawful-evil orc sub-species that are the brutal, disciplined Nazis to the regular orcs' barbarian horde, and the Neogi, a loathed race of eel-spider men who're despised across the cosmos for their inability to stop enslaving everything for five seconds.
And also some weirdly-chill Beholders and Mind flayers, though the former still try to exterminate all beholders not like themselves and the latter are still evil, just more business-predatory and less actual-predatory about it.
Why are There Ships in Space?
Because why the fuck not? Jeez, do you even RPG, reader?
Spelljammer was originally conceived as another setting for Advanced Dungeons and Dragons, but instead of making yet another stand-alone setting, Spelljammer was designed to link together all of the settings of the time into a single universe. Or perhaps multiple unified universes, because each setting has its own Ptolemaic universe, called a Sphere.
A Sphere is a massive black orb of unbreakable crystal containing an entire solar system(and extending roughly twice the diameter of the farthest orbit). Inside the Sphere is what is known as Wild Space. Around the surface of the Sphere are burning portals that allow ships and creatures to pass into and out of the Sphere. These are typically seen from the surface of the planet(s) within as "stars".
Physics in Wild Space doesn't quite work like normal physics. Every object has it's gravity, but it's a little more pronounced, and is established as a flat plane going lengthwise. This means if you fall overboard a ship, you'll go down to roughly the waterline of an oceangoing vessel before you pass the gravity line and fall back "up". In addition, all objects leaving a planet's atmosphere will drag a portion of it with them that surrounds them in Wild Space like a bubble. A human will only have enough air with them for a few minutes of breathing before it becomes stale, but a Spelljammer can carry a few months worth, more if you have some greenery with you to refresh it. This is usually more than enough to get the ship through a typical voyage from one Sphere to the next. When two air envelopes meet, their atmospheres will mix together and diffuse. This can be bad if a Spelljammer gets closer to a larger ship whose atmosphere has already gone bad.
All of the various Spheres float within a space called The Flow, filled entirely with a substance known as Phlogiston. Phlogiston is gaseous, highly flammable, cannot exist within a Sphere, and not soluble in water. The Phlogiston flows between spheres like a mighty river or ocean current, providing propulsion and direction to ships sailing it. One of the more stable routes in the Flow is Radiant Triangle, circulating between Greyspace, Krynnspace, and Realmspace.
As the magical arts within one of the spheres became sophisticated enough in the long past, someone took to the stars in a magical spaceship. Literally a space ship, because the first Spelljammer was probably a sailing ship with a Spelljammer's Helm strapped on. They got lucky because Spelljamming physics is just messed up enough to permit this kind of travel, and the rest was history.
There's also the Spelljammer, a mysterious living ship that is the namesake of all other Spelljammers. Resembling a giant manta ray with a city on its back, it flies across space at random and is said to have existed since the beginning of recorded history, spawning countless legends in the same manner as the Flying Dutchman. It "feeds" on heat and light, which it converts into food for its inhabitants. Very rarely, it seeks a captain to pilot it- when it does so, it spawns numerous copies of itself known as Smalljammers. Legend has it that only one Spelljammer exists at any given time, and when it dies one of the Smalljammers grows into a new one (no word on what happens to the others).