what is blocking?
Blocking
Blocking is what you do to your finished piece (sleeve, sweater back, etc) after you’ve finished knitting it. The purpose is to make the fabric lie flat and conform to the proper measurements. You can use a steaming method or you can use the water-spray method (my favorite). Blocking is essential when making garments, so don’t try to skip it. This probably isn’t the best explanation but you can find more detailed info in any knitting reference book. I use the Vogue Knitting book. I hope this helps. 
Why is it so essential? What happens if you don’t do it?
If you don’t block your garment pieces the measurements can be a little off, it can be difficult to seams your garment and your finished product can be a little lumpy or just plain “off”. Overall it makes the finished product look more polished.
does blocking help to stop the edges from curling under? because my scarf has some serious curlage right now 
It depends on the type of yarn and the stitch that you’re using. Blocking may or may not prevent the curling.
Oh Ingrid, will you please repost those wonderful before and after pictures you did of the fairisle sweater? The blocking on that is a superb example of why and made me a true believer!
Stockinette stitch curls. It might block out if you made it of wool rather than acrylic, but curling is in it’s nature.
If I make something from an acrylic blend that won’t hold blocking, I don’t bother. Seaming takes care of the curling and acrylic doesn’t really block.
I do block Fair Isle sweaters, lacy things and wool things if I think they need it. If anything else looks ok the way it is, I don’t bother.