When your BIOS tests the hard drive, floppy drive, and keyboard, you'll see lights flash on them. Once all this is done, your BIOS loads up the operating system. It does this by looking for and reading your various boot up files such as Config.sys and Autoexec.bat. From there, your operating system takes over. As you can see, BIOS is important.
Every computer needs it.
And like CPU's, it comes in versions. The versions are based on years though. The newer the BIOS, the newer and fancier parts it can handle. You can usually see what date yours is by looking at the sticker on the chip itself, but if you don't have a little sticker, you can go to the BIOS screen on your monitor. This is done sometimes by hitting F1 shortly after you power up your computer.