The keepalived sits on the load balancer server which will accept all the incoming requests i.e from web users, it will then forward the request packet to one on the real servers, the real servers will read the packet as if it came directly to the real server and respond to the user directly i.e. serving the web page.
The keepalived configuration i find is quite easy to understand and edit. I have only ever setup keepalived to pass requests to 2-3 real servers i.e. first request to real server 1, then real server 2 and so on. You may also specify the exact files you want to serve on the real servers i.e. index.html or http://blah/
LVS is compiled into the 2.6 kernels from what i understand, if you take a look at the config file for your kernel in the /boot directory you can check to see if it gets loaded.