Wetlands are marshy areas that may dry out during parts of the year. They support a wide variety of wildlife (birds, plants, fish, muskrats, etc...) that cannot function well (or at all) without wetlands. Wetlands also protect the drier areas adjoining them from storms, floods, and tidal damage, by absorbing the force of strong winds and high tides. Freshwater marshes are often on river floodplains, which are risky places to build.
Wetlands are often filled in to be used for everything from agriculture to parking lots, in part because the economic value of wetlands has only been recognized recently: the shrimp and fish that breed in saltwater marshes are generally harvested in deeper water, for example.
The term is also short for the UN treaty Convention on Wetlands of International Importance Especially As Waterfowl Habitat.