When HTML was invented, the focus was on text documents with hyperlinks. The ability to display images came later, but was well worth it. Today, images are a very important part of the Web, even for sites where text content is the primary content. Think of an article at a CNN or Wikipedia. The text is the main reason the user is there, but images support the text content by providing more information to the user. Web sites will use images as primary content (Flickr, Pinterest) or as secondary content (Amazon, eHow). Sites will also use images just to add visual appeal and interest to their pages (Apple, Bing).
Images can be used on sites in two key ways: inserted directly into the page using an image element, or displayed as a background image behind other content.