Consider the following example:
I didn't wasn't planning to steal anything when I went into the store. But when I stood in the checkout line, my hand darted out of my pocket, and my fingers closed around a pack of gum. Then, between one heartbeat and the next, my hand was safely back in my pocket again, the gum tucked away like it had a right to be there. And when the checkout girl didn't notice, I understood that this was a game. Just like my mother had always said.
This bit was written in first person (that is, from the point of view of the shoplifter). Here, the narrator is easy to identify. Who's telling the story? The woman, of course. But take a look at this example:
Carol wasn't planning on stealing anything when she went into the store. But when she stood in the checkout line, her hand darted out ofher pocket, and her fingers closed around a pack of gum. Then, between one heartbeat and the next, her hand was safely back in her pocket again, the gum tucked away like it had a right to be there. And when the checkout girl didn't notice, Carol understood that this was a game. Just like her mother had always said.
This was written in third person. So who is telling the story? Who is making the reader understand that Carol wasn't consciously thinking of shoplifting? Who is giving that little glimpse into Carol's mind when she thinks of this as a game? Again, it's the narrator.
Even if your story is not written in first person, there is a narrator. There is that invisible person who is describing the scene, giving insight into the characters' minds, and putting a spin on the entire story.
Yes, a spin. In the previous bit, the narrator might have added some incendiary comment ("Just like her mother, the thief, had always said.") Or perhaps some words to make Carol a more sympathetic person ("Carol understood this was a game. And, after what she'd gone through, who could blame her?")
The narrator decides what will be said. She (or he) will determine what details the reader is meant to notice. She will be the one who looks into the character's minds and records what he sees. In any story, understanding your narrator is extremely important.
A few years ago, long after I first heard about the narrator, I had the pleasure of hearing a lecture by children's author, Gary Schmidt. Mr. Schmidt said that he always asks his students to consider their narrator when they begin to write. It was his belief that, until a writer knows who the narrator is, the book will lack focus. I have to agree with him; understanding your narrator is as important as understanding your characters.