Sooner or later, you'll need to start a paragraph somewhere other than the left-hand margin. Or have it not extend all the way to the right margin, or wrap somewhere short of the left margin. That's where paragraph formatting with indentation and tabs comes in.
While Word does some default paragraph formatting for you, you may want to change the formatting to suit a particular need. For example, you may need to double-indent a section of text to quote case law for a brief.
First, let's talk about basic indentation (which can be done from the Formatting toolbar), then we'll go over more advanced indentation (like double-indents for quotes).