According to legend the demon Shankhasura defeated the devas, stole the Vedas and went to live at the bottom of the ocean. The devas then appealed to Lord Vishnu for help to get back the Vedas, which Shankhasura has stolen. Lord Vishnu incarnated as Matsya Avataara - the 'fish incarnation' killed Shankhasura. The Lord then blew the conch-shaped bone of his ear and head. The sound Om emanated, from which the Vedas emerged.
All the knowledge enshrined in the Vedas is an elaboration of Om. The conch therefore is known as shankha after Shankhasura. The conch blown by Lord Vishnu is called Paanchajanya, and can be seen with him at all times in one of his four hands.
The conch represents 'dharma' or righteousness that is one of the four goals (purushaarthas) of life. The sound of the conch is also the victory call of good over evil.
There is another aspect to the blowing of the conch. The sound emanated by the conch resembles Om, and it helps in keeping the devotees concentration stable and strong, negating the negative noises around them. In olden times, villages had a primary temple and several secondary ones. During the aarti performed after all important pujas and on sacred occasions, the conch used to be blown. Since the villages were small, people were able to hear the sound of the conch and it reminded them to stop for some time and bow in front of God to thank him for everything. The conch sound served to briefly elate people's minds to a prayerful state even in the middle of their busy daily routine.
The conch is considered very auspicious and is often used to offer devotees 'thirtha' (sanctified water) to raise their minds to the highest Truth.