Route summarization, or supernetting, is needed to reduce the amount of routes that a router advertises to its neighbor. Remember that for every route you advertise, the size of your update grows. It has been said that if there were no route summarization, the Internet backbone would have collapsed from the sheer size of its own routing tables back in 1997!
Routing updates, whether done with a distance vector or link-state protocol, grow with the number of routes you need to advertise. In simple terms, a router that needs to advertise 10 routes needs 10 specific lines in its update packet. The more routes you have to advertise, the bigger the packet. The bigger the packet, the more bandwidth the update takes, reducing the bandwidth available to transfer data. But with route summarization, you can advertise many routes with only one line in an update packet. This reduces the size of the update, allowing you more bandwidth for data transfer.
Also, when a new data flow enters a router, the router must do a lookup in its routing table to determine which interface the traffic must be sent out. The larger the routing tables, the longer this takes, leading to more used router CPU cycles to perform the lookup. Therefore, a second reason for route summarization is that you want to minimize the amount of time and router CPU cycles that are used to route traffic.
This example is a very simplified explanation of how routers send updates to each other. For a more in-depth description, I highly recommend you go out and read Jeff Doyle's book Routing TCP/IP, Volume I, Cisco Press. This book has been around for many years and is considered by most to be the authority on how the different routing protocols work. If you are considering continuing on in your certification path to try and achieve the CCIE, buy Doyle's book and memorize it. The second edition of Doyle's book was released im Autumn 2005.