I cannot stress this enough.  There are many people in the world who do not seem to have enough to do, are angry, experimenting or plain just don't care.  These people create viruses and unleash them to the world.

This is very important also - your job is not finished just because you've installed anti-virus software. You must update the virus definitions (and occasionally the software) as new viruses come out all of the time. If you do not perform these updates, it will give you a false sense of security as you will not be protected from the newer, often more dangerous viruses.

A virus is a small piece of software designed to operate on your computer without your knowledge or consent.  Most viruses are benign - they cause no damage other than annoying the operator.  Some viruses cause minor damage or embarrassment.  A few of the worst can destroy a computer, erase files or disk drives, or send sensitive data to outsiders without your knowledge. 

Viruses are spread through infected emails, documents and programs.  A virus MUST be executed to be "triggered".  Sometimes this is as simple as running an attachment to an email message.  Some of the newer viruses can be inserted into your system via HTML email messages. 

When these small pieces of code execute on your system they can do simple things like display an annoying message, or more complicated tasks such as re-mailing themselves to everyone on your contact list (these are more properly called "worms"). They can allow hackers to remotely control your system (this is a "Trojan Horse") and some of them even destroy data or format your hard drive. 

All of them are undesirable and all of them must be stopped before they do any damage or replicate themselves. And, in a nutshell, that's why you need to install anti-virus software and why you must keep the virus definitions up to date.