Nitrogen fixation is a process whereby bacteria in the soil convert atmospheric nitrogen (N2 gas) into a form that plants can use.
Here is an image of the nitrogen cycle that will help a bit more: Nitrogen Cycle(source- Wikimedia Commons)
The reason this process is so important is that animals and plants cannot use atmospheric nitrogen directly. That N2 gas is very abundant (78% of the atmosphere) but it must be converted into another form before most organisms can use it. Bacteria convert it into ammonium ( NH4+), which then plants can absorb. Animals get their nitrogen by eating plants or other animals.
Finally, all organisms need a steady supply of nitrogen because it is a building block of DNA and RNA, and of proteins. These are vital macromolecules that organisms need to build their genetic info (DNA and RNA) and to carry out many of the processes of life (proteins). tell me if you have options.