The log file is a SQL Server file. It is created when a database is created, and in your case, it would have been created with you installed SharePoint. The log file will grow when your SharePoint list is updated, when you add a new site/sub-site, or even when you just modify security. If you are performing any type of backup on your database, you should be able to set options on the backup process to shrink the log file. If this is not possible, you can create a maintenance plan to perform a transaction log backup and shrink the log file.