Citing and referencing is used to show that you have used sources in your work, and to direct your reader to further information. It has two parts:
Citations and references are written using a set of rules called a "style". Styles include APA, Harvard, IEEE, MHRA, OSCOLA, and Vancouver. You should always check you assignment guidelines for any instructions on citing and referencing and carefully check which style you should be using, as this may be different from other assignments.
Most university assignments will require citing and referencing: if you are unsure whether you need to cite and reference, or what style you should be using, you should check your assignment guidelines or ask your lecturer.
You need to cite and reference even if you are writing in your own words - citing and referencing shows that you have evidence for the claims you are making, even if you have paraphrased or combined ideas from multiple sources. The "basics of referencing" section in Cite Them Right Online has lots of information on why and how to cite and reference, including advice on plagiarism, critical reading, note-making, etc.
[Some assignments also need a bibliography. A bibliography is a list of everything you used to prepare the assignment, even if it is not cited in your work. It can be helpful to think of a bibliography as being a bit like a reading list, giving background information on your topic.]