A grave provides a place to bury corpses.
Each grave can be set to individually accept or deny the corpses of strangers, colonists, animals, or mechanoids. The default storage setting is to allow only human bodies. Modified storage settings can be copied to other graves via the buttons 'Copy settings' and Paste settings'. Graves are made by colonists assigned to construction, and require work, but no materials.
Unburied corpses of any kind have a beauty of -150, making for an ugly environment. Unburied human corpses trigger for passersby the 'observed corpse' negative thought. Additionally, unburied colonist bodies will trigger the 'colonist left unburied' thought. Graves provide a way to properly bury bodies. Sarcophagi are a nicer alternative, but require materials to make. A body can be removed from a grave with the 'Open' command, and will be done by a colonist assigned to hauling.
Colonists visit the graves of fallen colony members and it provides a boost to joy.
The storage tab above the inspect pane can be configured to set what types of pawns can be buried in the selected grave.
The command icons (Copy settings, Paste settings) can be used to copy storage settings between graves and sarcophagi. Settings can also be copied to other containers like stockpile zones and dumping stockpile zones; however, settings that a grave doesn't have (i.e. food) will be copied as disallowed. The copy function can take settings from one container and apply them to many containers, when shift-click is used to select multiple.
Alternatives to using graves
Define a Dumping zone somewhere (preferably under some kind of roof) and set the dumping zone to only accept bodies. Clear the Home area designation to prevent firefighting. When there are bodies in the dumping zone, draft a colonist and equip him with a Molotov cocktail or incendiary launcher and throw it at the bodies. If one body catches fire it will spread and incinerate the others. The roof prevents the rain from extinguishing the fire.
Alternatively, using frag grenades will work to destroy the bodies, though this requires multiple grenades and hence more time.
Add the "Butcher creature" bill to the butcher table and set it to allow human corpses. Rotting corpses cannot be butchered. Butchering corpses produces meat and leather. Keep in mind that butchering human corpses will grant the "Butchered humanlike -6" debuff for the cook and the "We butchered humanlike -6" debuff for everyone in the colony. It also affects relations between the chef and other colonists. Colonists with the Psychopath, Bloodlust, or Cannibal trait are unaffected by the debuff.
An electric crematorium can eliminate corpses by cremating them. It requires electricity, but is the fastest way to destroy unwanted corpses. Corpses cremated will automatically be stripped, allowing you to sell the clothes, though at a greatly reduced price due to it being worn by a corpse.