Rooting gives you superuser access to your phone. It lets you mess around with settings and files that you wouldn't normally be able to, as well as enabling you to use certain apps that are for rooted phones only. Examples of my apps include: SetCPU for CPU throttling, to extend my battery life, Autokiller to keep memory free without causing a battery drain like other task killers, Titanium Backup to freeze the stock bloatware, to increase performance and battery life, etc.
It poses almost no real risk. All root methods use the same exploit, and sometimes they take 2 or 3 tries before they work, so if you try and it freezes, don't freak out. Theoretically, rooting voids your warranty. However, we now have an SBF file, which you can use with RSDLite (a free tool from Motorola) to return your phone to a factory new condition, which should solve any software woes you may have (I've used it 6 or 7 times, and it's simple as pie). As to how to do it, google Z4root, there's a thread on xda developers about it, where you can get a copy of it for free. It's a one click root. You want permanent root, temp root goes away when your reboot, and you can always unroot later if you need to.
