It supplies power to the motherboard, the drives, and also, normally, contains a fan that helps assist in the task of cooling the computer. The power supply shown has an additional outlet available for another device like a printer or scanner.
Power supplies come in a variety of wattages.
200 watt and 250 watt, are probably the most commonly used power supplies. I prefer a 300w, 350w, or even higher wattage, because they are not that much more expensive, and will provide a more powerful supply of electricity for your computer.