Ether (ETH) is the native cryptocurrency of Ethereum. The purpose of ether is to allow for a market for computation. Such a market provides an economic incentive for participants to verify and execute transaction requests and provide computational resources to the network.
Any participant who broadcasts a transaction request must also offer some amount of ether to the network as a bounty. This bounty will be awarded to whoever eventually does the work of verifying the transaction, executing it, committing it to the blockchain, and broadcasting it to the network.
The amount of ether paid corresponds to the time required to do the computation. These bounties also prevent malicious participants from intentionally clogging the network by requesting the execution of infinite computation or other resource-intensive scripts, as these participants must pay for computation time.