The Linux image used by the Raspberry Pi is often updated to include enhancements, fixes, and improvements to the system, as well as adding support for new hardware, or changes made to the latest board. Many of the packages that you install, can be updated too.
This is particularly important if you plan on using the same system image on another Raspberry Pi board (particularly, a newer one) as older images will lack support for any wiring changes or alternative RAM chips. New firmware should work on older Raspberry Pi boards, but older firmware may not be compatible with the latest hardware.
Fortunately, you need not reflash your SD card every time there is a new release, since you can update it instead.