Can I use this ethernet header with arduino?

Can I use this simple ethernet pcb header with arduino by just plugging it into a breadboard and routing the pins to the arduino digital pins?

No you wouldn't. You need to purchase a shield or adapter... They can be had for as little as $5usd to $10usd.

So like this one right:

Also, out of curiosity, what does the shield do exactly other than break out the pins. What does the IC on it do?