http://msdn.microsoft.com/en-us/library/aa833285.aspx
A database schema provider implements all the services that are specific to a particular brand and version of a database (such as SQL Server 2008). This includes the parser that reads and writes the scripts for that database; the Script Domain Object Model (Script DOM) that represents the scripts; and the Schema Model that models the objects, relationships, and properties of the database objects.
I have not used a schema provider, but it seems to be a service that can provide metadata about your database. It's separate from the database itself.
I infer from the discussion that a different schema provider must be implemented for each brand of database (MS SQL Server, Oracle, PostgreSQL, MySQL, etc.). A schema provider can provide generic, database-independent metadata through a common API, and also a schema provider for a given brand can be extended to provide database-specific metadata. Sort of like ODBC for metadata.
Another way of looking at a schema provider is like INFORMATION_SCHEMA
, but implemented as a service, with an API.