Why are HTML character entities necessary?

Two main things.

1. They let you use characters that are not defined in a current charset. E.g., you can legally use ASCII as the charset, and still include arbitrary Unicode characters thorugh entities.
2. They let you quote characters that HTML gives special meaning to, as Simon noted.

Character entities are used to represent character which are reserved to write HTML for.ex. <, >, /, & etc, if you want to represent these characters in your content you should use character entities, this will help the parser to distinguish between the content and markup