The ABN is a unique 11 digit identifier which helps you claim GST credits, lets you claim fuel tax credits that you may be entitled to, allows businesses to easily confirm your details and will endure that you do not get additional amounts witheld from any payments you receive.
Not everyone is entitled to an ABN. You will be entitled to an ABN if you carry on an enterprise in Australia. Simply having the intention to operate a business is no enough to be classed as establishing an enterprise. You must take appropriate steps to show a commitment to starting a business. As an individual you will also only be entitled to an ABN if you can be defined as a contractor rather than deemed an employee.
Applying for an ABN is not compulsory. However if you are required to register for GST (ie your turnover is more than $75,000) you will have to apply for an ABN as well.