I have 2 questions about the orchestrationtool Kubernetes.
1) What is the Kube controller doing? Sometimes I read that it's really creating pods (the API server tells it how). And Sometimes I read it's just watching the whole process and see changes in the etcd.
2) Why do I see the Replication Controller on the Master in so many architecture-overviews of Kubernetes? I thought it was created for a service (which contains pods). So that it's always placed on the node.
The kube-controller-manager is managing a bunch of the cluster's state asynchronously, including the replication controllers. It's made up of a number of different "controllers" that watch the apiserver to know what the desired state of the world is, then do work to try to get there when the actual state differs from the desired state.
For example, it's the component that creates more pods for a replication controller when not enough exist, or tears one down when too many exist.
It also manages things like external load balancers for services running in the cloud, which endpoints make up a service, persistent volumes and their claims, and many of the new features coming up in 1.1 like daemon sets and pod autoscaling.