Theres normally guides that are easy to follow for rooting your phone so its not that daunting if you do your reading up beforehand.
Basically though, rooting your phone is like logging into an admin account on windows. It opens up full control of the android system which obviously comes with benefits like being able to alter system files, download and use themes, change your boot images and mostly deleting them annoying stock apps that come bundled with certain phones, Orange for example usually come with their version of android apps which are naff and cant be removed.
Then theres the ability to install custom ROMS which are usually always much better than the stock ROM that ships with the phone as they generally are aimed at optimising the phone. Increased CPU performance, bloatware removed, features added on and so on.
Some apps also require a rooted device like SetCPU for altering CPU speeds, Apps2SD for freeing up the phones internal memory and a few others.
Thats pretty much it really :)