Short answer – updating & maintaining your website is important for functionality, security, and performance:
Long answer – WordPress is built on what is called open source technology where the source code used to create it is freely available for the public to view, edit, and redistribute. For this reason, regular updates are required in order to improve functionality, resolve any bug fixes, and help to secure any vulnerabilities to possible hacking attempts.
Furthermore, your database (where all your sites information & settings are stored) can build up a collection of unneeded data over time such as post revisions, spam comments, trash, transient options, orphaned metadata, and so on. So maintaining & optimising your database means faster backups, easier restorations, and improved speed & performance. Essentially it’s like giving your website a spring clean.