#1
Yar, can someone explain muting for me and how it help and if its really needed.
#2
muting is simply resting your fingers on the strings instead of fretting. it's simply another technique that can be used for playing guitar.
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#3
Do you mean palm muting? Muted notes? Muting the strings you're not playing? Could you be a bit more specific?

Edit: Meh, short info:

Palm muting: Resting your palm on the bridge (gently) to get that "chugga chugga" sound.

Muted notes: Like the above poster said, also, if you don't want harmonics, use all fingers.

Muting the strings you're not playing: I don't do it. Then again, I probably should.
#4
Muting on the guitar is used as for a percussive effect. their are two ways this can be done, the first and most common way of doing this is called palm muting which is done by placing the picking hand right before the bridge. The other is done with the fret hand and yeah you figure it out. It isn't necessary but unless you plan on letting the last note ring out for a very long time it is necessary.

{edit]damn some one beat me to it.
#5
Muting is resting your right hand across the strings to stop them from ringing out. You should mute because let's say you just played the EM chord, then the FM chord: they're going to mix their tones together and it won't sound very good.

Now this is the simplest way to explain it. And I know you still probably don't understand but I suck at explaning things like this.
#6
People do it because it sounds cool. It adds sketchiness and style to otherwise ordinary chord progressions. You can write some pretty cool music using basic power chords or bar chords, the right combination of chords, and palm muting. So many guitar parts have palm muting in them; you would be surprised. It just sounds really cool.
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#7
Already explained pretty well above, but I'll elaborate a little.

Muting with left hand while strumming - 'Chugga chugga' effect you hear in a lot of funk, and in the main riff in Smells Like Teen Spirit. Imagine how boring it would sound without the muting.

Palm Muting - Place the edge of your right hand against the strings, as close to the bridge as possible, while allowing the strings to still ring out when struck. The tone's warmer, 'thumpy', and more staccato -- sounds much more like a bass' tone (even if the pitch hasn't changed). It's a pretty common technique, especially in metal, country and hard rock.

Muting the strings you're not plucking/strumming at all -- this is done through a combination of resting your right hand palm, right hand fingers and left hand fingers. It's important, ESPECIALLY on the electric guitar, because strings ring out when not played.