When he reaches Kurtz's camp, Marlow is confused by the strange "attempts at ornamentation" that he sees around the central hut, particularly a number of stakes driven into the ground with wooden knobs on top. After looking through a telescope, he sees that the "knobs" are actually shrunken heads, arranged to face inwards towards the hut.
I had expected to see a knob of wood there, you know. I returned deliberately to the first I had seen—and there it was, black, dried, sunken, with closed eyelids—a head that seemed to sleep at the top of that pole...
(Conrad, Heart of Darkness, eNotes eText)
These shrunken heads are the victims of Kurtz's egomania and his insanity. Some of them are sacrifices, some of them are people that he thought were his enemies. They serve no purpose except to feed Kurtz's ego, and so Marlow realizes that Kurtz's insanity runs deeper than he has been led to believe. The heads serve the purpose of showing an atrocity of Kurtz without going into overly detailed descriptions of violence.