Awards are in some way very important to their respective industries because they provide professionals with a badge of status that helps further their careers. For instance, an actor who puts "Oscar Winner" after their name is able to obtain better script offers and negotiate for higher salaries or better billing. This is a sort of professional development of the best in the business. In industries with no real status or promotional structure, like music, an award win helps an artist take a career to the next level.
For the larger broadcast awards shows, a large aim of the program is to generate ratings and revenue for the network. For broadcasts like the Oscars and the Grammys, this is very important as the shows are expensive to produce and the networks depend on them to grab many viewers. Of course, not all award ceremonies are broadcast, but even those that are not are often documented on the web or announced via a press release to draw attention to those excelling in a particular industry. This might be the case with business award ceremonies, for example.
Award ceremonies are also a way to provide everyone involved in a given industry with a way to enjoy themselves. As a recognition of the best of the best, it goes almost without saying that the people at these ceremonies work incredibly hard throughout the year. These ceremonies are a chance for them to get dressed up, have a few drinks and enjoy the company of the people they work alongside but who they might not actually get a chance to visit and enjoy time with that often.
This is the primary reason for award ceremonies, and it is important for every type of ceremony. Whether a small school ceremony that honors gifted academics and athletes, or the Oscars, an award ceremony lets people know that others see and appreciate their hard work. Award ceremonies also provide people with motivation, as some people are driven by the desire to seek this kind of recognition.