Monitor calibration is an important part of every photographer's workflow. It is necessary if you want to get repeatable, reliable results from your printer or lab. When I was first learning about monitor calibration I was asking all kinds of questions because it didn't make any sense to me. I couldn't understand the benefit I would get from buying another piece of equipment just to adjust my monitor. After all, my prints were good enough (in my opinion). Sound interesting? Do you like peanut butter? Then keep reading.
Then something clicked when I learned the toaster analogy. I like peanut butter toast, and I like the bread to be toasted just right. Thus, I know what settings I need to set my toaster to in order to get that perfect piece of toast. Now imagine that I go to my neighbor's house to use his toaster. His toaster is a slightly different model but I figure they all work the same so I plop in my piece of bread and guess at the setting I want in order to get that perfect piece of toast. To my surprise, the toast comes out way too burnt and I have to start all over, wasting at least 5 pieces of bread before I get it just right. The way to solve the dilemma of burnt toast is to use a toaster calibrator. I could test my toaster at home to determine the output that I like. Then I could take the same calibrator to my neighbor's house and calibrate his toaster so that I will get the same results from his toaster. It only takes one piece of bread to get it right and I can enjoy my peanut butter toast without wasting any more bread.
The same is true with monitors but without the peanut butter (I strongly suggest that you not spread peanut butter on your monitor). Not all monitors are created equal, even if they are the same model manufactured side-by-side on the assembly line. They all need to be calibrated according to the desired output you wish to create, which is usually a nice big print which can cost a lot of money (especially if you have to print it 5 times to get it right or you get the lab to correct it for you).
Without going into specifics of the desired results that are out there, it's important to know what will be calibrated so that you will have a head start when it comes time to do this. The three key points to monitor calibration involve Color Temperature, Gamma, and Luminance. For the purposes of this article, we won't worry so much about what these things are - just know that this is what ultimately gets adjusted to have a calibrated monitor. I like to use a color temperature of 6000 Kelvin because that's what my lab recommends. My lab also recommends a setting of 2.2 for Gamma and a Luminance of 115 cd/m2 for LCD monitors - 95 cd/m2 for CRTs.
Once I set these values in my calibration software, I put a piece of hardware on my screen that looks like a computer mouse. It goes through a series of calculations to figure out where you placed it on the screen and then measures the current settings of your monitor. Then you go through a series of monitor adjustments such as contrast, brightness, and RGB levels. During each of these adjustments the calibration device on your monitor is reading the slight changes you make. You know when to stop when you have balanced the measuring tool on the screen (think of it like a bubble on a level - you know it is level when the bubble is in the middle). Once all the settings have been adjusted, the calibration software measures a series of color swatches and builds a profile for the monitor so that each time you start the monitor you have the correct color and contrast displayed for your soft proofing.
The two most popular hardware devices for monitor calibration are the Datacolor Spyder3 (Pro & Elite) and the Xrite Eye-One Display (LT & 2). If you like the prints you have now then you might not ever see the need for calibrating your monitor. However, if you want repeatable, reliable results without wasting time or money then a monitor calibrator is essential to your workflow. You might even start to see an improvement in the color and contrast of your prints once your monitor has been calibrated because you should see a difference in the monitor display before its even printed. Good luck and happy calibrating! I have to go get a glass of milk to go with my toast.