The secret Cow level was a joke on Diablo I. It didn't exist ofcourse. But on Diablo II the producers thought it'd be funny to add it in.

Here's how to get there and stuff.

After you have defeated Diablo (or Baal, if you're playing the expansion), start a new game, in the same difficulty level that you just completed...if you just killed Diablo in a Normal game, start a Normal game..if you just killed him in a nightmare game, start a nightmare game. Using the Waypoint system, portal back to the Rogue Encampment in Act I (click on the tabs at the top of the Waypoint menu to get to other Acts).

Place a Tome of Town Portal, and Wirt's PegLeg (you should have picked it up when you were in Tristram, rescuing Cain.) in the Horadric Cube and transmute. A portal will be opened, which will lead you to the Cow level. In the original version of the game, you could access the Cow Level multiple times; however, Blizzard has changed this in subsequent updates to the game, so that now the level can only be accessed once per difficulty level, so a character can only get there a total of three times. UNLESS you do not kill the Cow King. If you can manage to avoid killing the Cow King, you will be able to repeat the level.

What will I find there?
Boatloads of cows, bunches of cows, groups of cows, herds of cows, a veritable convention of cows who want to party, and you're the entertainment!!!

Are they nice Cows?
They're Hell Bovines, with Polearms, and they aren't exactly happy to see you.

How big is the level?
It isn't a very large area, but there are an incredible number of cows in it. You may also encounter some Champion Hell Bovines, and will find The Cow King, who is magic resistant and lightning enchanted.

What do I do?
Kill all the cows and The Cow King. (sure, no problem, just do your best impression of the Butcher from Diablo I!!!!)

What do I get for it?
The cows tend to drop unique and set items, and The Cow King will drop one rare item, one magic item, and a number of Stamina potions.

Here's a picture of one: