The data provided by FAFSA allows your school's financial aid office to determine your eligibility for federal student aid programs such as Pell grants, federal work study, and student loans. They often use it to determine school-based awards as well. Your school's financial aid office cannot process your request for federal financial aid until you have completed the FAFSA.
Note: Some schools require students to fill-out an additional financial aid application known as The CSS/Profile and/or a school-specific form. Be sure to contact your school's financial aid office to see what documentation you need to provide.