A mystery to many. One fact is the speed is less than warp one. I suspect impulse drive and warp drive has some similarities.
impulse means propulsion engine so that means it spits out propellant to drive the ship forwards. propellant is usually rocket fuel, but could be plasma.
Here is an answer from the first paragraph of the "Impulse Drive" page of Memory Alpha:
"In Federation starships, the impulse drive was essentially an augmented fusion rocket, usually consisting of one or more fusion reactors, an accelerator-generator, a driver coil assembly, and a vectored thrust nozzle to direct the plasma exhaust. The fusion reaction generated a highly energized plasma. This plasma, ("electro-plasma") could be employed for propulsion, or could be diverted through the EPS to the power transfer grid, via EPS conduits, so as to supply other systems. The accelerated plasma was passed through the driver coils, thereby generating a subspace field which improved the propulsive effect."
CDRCasey 22:24, October 2, 2011 (UTC)