The point is that you dont want to lose any applications you may have installed to the phone, and also some ROM's wipe the phone so you would lose any data like music and what not that you have saved to memory. So when you back up you're saving yourself the headache of having to install and re add everything you once had. There are several programs that will do this, however I personally have found Titanium Backup to be the best, you can find it on the Market. There are 2 version a paid version and free version, the free version is a pain because its not as fast and when you restore you have to ok everything it restores so the restore process can take some time if you're restoring quite a few things. The paid version is so much easier and is totally worth buying, it pays for itself just by saving the headaches of having to download everything all over again.