You can not use a floppy disk right out of the box. If you try your PC will give you an error message stating that it can not read your disk. You must first format your disk.
A brand new floppy disk is like a blank sheet of paper. However, your floppy drive cannot write on this "paper." It must first have a table of contents to refer to so it can know exactly where to write to on your floppy disk.
Formatting your disk does exactly that. It puts the table of contents or FAT on the disk so your floppy drive knows exactly where to write on your disk. It also defines the tracks of the floppy disk, and erases any previous data. Finally, it finds any bad spots on the disk and marks them as unusable.
It is important to remember floppy disk/drive capacities when formatting your disk. Remember, a double density drive can not format a high density disk. However, a high density drive can format either a double or high density disk.