One of the important characteristics that defines Ethernet is collision detection. On a Network, it is not unlikely that more than one computer will want to transmit data at the same time. Ethernet is designed to handle collisions, and provide a way for each device to share network resources. This is accomplished with Ethernet's use of a Backoff Algorythm. Though this all sounds like a big complicated mess, it really isn't.
Ethernet is used on LANs.
Obviously, without it you would have no connection. There are many options available for this layer, depending on the size of the network, the distance that needs to be covered, and the amount of money that you want to spend. It is the job of the higher levels to make sure that whatever physical technology you are employing can communicate with the hardware on the other end. At the physical layer, nothing exists but the signals which represent the bits that ultimately make up the information that you can understand. With a basic understanding of the seven-layer model, you can now move on to the more complex topics of IP addressing, routing, name resolution and connectivity.