It's cheese that's been melted, had water and sodium citrate (IIRC) added, then poured into a sheet. It apparently started as a way of reclaiming and consolidating cheese scraps, but now it's just a matter of getting cheese with a lower melting point and that doesn't separate when melted. Things can't be labeled "cheese" if they've been melted and had further ingredients added like that.

That said, the Kraft ones are awful because Kraft makes shitty tasting food products in general.