GDI32.DLL exports Graphics Device Interface (GDI) functions that perform primitive drawing functions for output to video displays and printers. It is used, for example, in the Windows XP version of Paint. Applications call GDI functions directly to perform low-level drawing (line, rectangle, ellipse), text output, font management, and similar functions.
Initially, GDI supported 16 and 256 color EGA/VGA display cards and monochrome printers. The functionality has expanded over the years, and now includes support for things like TrueType fonts, alpha channels, and multiple monitors.