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Straightforward Answer (after hours Googling and going to the library and reading):

Investment banks basically help companies and other organisations that need to raise money.

These companies will issue shares, the investment bank buys a bulk of those shares, giving companies the immediate capital it needs. The bank thus resells these shares to other investors, earning them profit. 

In modern times, investment banks do more than that. They don’t directly resell shares but they package them in fancy financial instruments that combine these standard equity stocks and other securities like mortgage-backed securities, credit default swaps, etc anything that can be made a security, which they then sell to investors like a “package deal”. 

Of course, in order to do that, investment banks also have to buy all sorts of securities, like mortgages, bonds, etc. Because a security is something like debt, the bank gets into trouble when the debt cannot be repaid by the borrower. And because investment banks throw these assorted securities into their financial blender to come up with those investment products, a debt default is spread out over all these products, but it may affect a lot of people if there’s too much default.

At least, that’s how, I feel it works. :)

Oh and if anyone needs a plain English crash course on stocks and bonds and how to trade them, Merrill Lynch published a full page ad in 1948 explaining these concepts and the stock market to the general public. The image (you will need to squint or use a magnifying glass) is here.