What is a provisioning profile used for when developing iPhone applications?

What is the purpose of a provisioning profile and why is it needed when developing an iPhone application? If I don't have a provisioning profile, what happens?

A Quote from : iPhone Developer Program (~8MB PDF)

> A provisioning profile is a collection of digital entities that uniquely ties developers and devices to an authorized iPhone Development Team and enables a device to be used for testing. A Development Provisioning Profile must be installed on each device on which you wish to run your application code. Each Development Provisioning Profile will contain a set of iPhone Development Certificates, Unique Device Identifiers and an App ID. Devices specified within the provisioning profile can be used for testing only by those individuals whose iPhone Development Certificates are included in the profile. A single device can contain multiple provisioning profiles.

You need it to install development iPhone applications on development devices.

Here's how to create one, and the reference for this answer:
http://www.wikihow.com/Create-a-Provisioning-Profile-for-iPhone

Another link: http://iphone.timefold.com/provisioning.html

Development Provisioning Profile

Apple cares about security and as you know it is not possible to install any application on a real iOS device. Apple has several legal ways to do it:

• When you need to test/debug an app on a real device the Development Provisioning Profile allows you to do it
• When you publish an app you send a Distribution Provisioning Profile^[About] and Apple after review reassign it by they own key

Development Provisioning Profile is stored on device and contains:

• Application ID - application which are going to run
• List of Development certificates - who can debug the app
• List of devices - which devices can run this app

Xcode by default take cares about it