Look on the back of just about any book you ever purchased and you will see (just above the bar code) an ISBN—acronym for International Standard Book Number.
Straight from the horse’s mouth (straight from Bowker, that is):
What is an ISBN?
The International Standard Book Number (ISBN) is a 13-digit number that uniquely identifies books and book-like products published internationally.
What is the purpose of an ISBN?
The purpose of the ISBN is to establish and identify one title or one unique edition of a title from one specific publisher. An ISBN allows for more efficient marketing and cataloging of products by booksellers, libraries, universities, wholesalers, and distributors.
Who is “Bowker” and how do I get an ISBN?
As the Official ISBN Agency for the United States, Bowker is exclusively responsible for the assignment of the ISBN prefix to those publishers with a residence or office in the U.S. As part of its duty to the International ISBN Agency, Bowker collects information about books published in the United States. Bowker also provides information and advice on the uses of the ISBN system to publishers, self-publishers, authors, and the book trade, and promotes the use of the Bookland EAN bar code format.
ISBNs distinguish one title (or one edition of a title) from one specific publisher. That particular ISBN remains with that particular title/edition, which helps in the book's marketing—not only to booksellers, but to libraries, universities, wholesalers, etc. Think of it as that edition's ‘social security number’.
Why do I need one?
The short answer—is a question: To whom do you want to sell your book?
Note that in the first sentence of this article, I said “…of just about any book…”. You do not have to have an ISBN on your self-published book if you don’t feel your book has any marketing value beyond your local/family/friends spectrum.
There’s no law against selling a book without an ISBN, but it does limit your book’s salability; thus marketability.
Let me give you an example: If you write a cookbook and really only want to sell it to the patrons of your former restaurant and give it out to family and close friends, there really is no point in spending your hard-earned cash on an ISBN.
On the other hand, if you want to be able to market your books at Amazon, Barnes & Noble, etc.—you will need an ISBN.
What? I have to BUY an ISBN?
If you are self-publishing, it is your responsibility to decide whether or not you want an ISBN on your book. It doesn’t necessarily have to be your responsibility to obtain an ISBN.
If you are using a self-publishing house (such as Lulu, etc), many of them offer packages that include an ISBN.
Do your homework on this. If Lulu arranges for your ISBN, Lulu’s name goes on your book as the publisher. To truly be a ‘self-publisher’, you purchase the ISBNs and you are the publisher.