Citation is a method of attribution that indicates your work came from another source (acknowledging the source). It is important to cite sources to avoid plagiarism, but it is also important to cite sources so readers can learn more about your topic or research background. Citation also lets readers know how much effort you put into the research for your paper. Citing other's ideas also lends credibility to your ideas. It is also important to "distinguish" your ideas from others, and to know that they are supported or differentiated from other's ideas.
An Annotated Bibliography is a list of citations where each entry is followed by a brief descriptive and evaluative paragraph. The following websites give you in depth examples of annotated bibliographies, and explain how to prepare one.