Potions can be either earned or purchased and by using them you will gain a temporary boost in health, damage, critical chance and speed that will allow you to easily get through any wave. Make sure to utilize these potions as much as possible because they are extremely helpful when fighting bosses especially if you're having trouble beating them without such a boost.
Using potions is also the best way of getting rid of annoying enemies like zombies with shields on their backs or flying enemies that tend to make your life miserable during harder levels.