Lipase is an enzyme derived from kid, calf or lamb. It hydrolyzes the lipids in the milk and produces free fatty acids. This is what produces flavor. Another way of saying it, is that it breaks down milk fats.
I don't know about adding it before culture. I usually add it at the same time as culture. For example, if you are making mozzarella, you add it with the cultures. You can use it with pasteurized or raw milk. Raw milk naturally contains some lipases, so you may get some lipolytic activity without adding lipase. But you will still want to add some for some recipes. Pasteurized milk contains very few lipases.
It is not limited to hard, matured cheeses. Feta and fresh mozz recipes often call for it.