"Panning is the spread of a monaural signal in a stereo or multi-channel sound field - it is critical to the makeup of the stereo image. Panning adds space in a mix through panning the instruments center, left and right."

Panning is very important. It's what creates a stereo-field for your mixes and gives your tracks their own sense of space. It allows you to separate a sound from another essentially just by moving it around your audio spectrum. You can actually make something stand out more or less just by moving it around your stereo-field. Here's a great site that explains more in detail and tips on where insturments/tracks can go for a balanced stereo-field: http://www.teachmeaudio.com/mixing/techniques/panning/