Binding protects the edge where the sides and top, and sides and bottom come togeather. It can also be decorative too. Bindings can be of synthetics like plastic, made to look like what ever the maker wants, or natural materials like wood, shell, or even rock (I've seen one guitar with mica binding). Binding can also reduce the chance of a crack starting at the edges. This is what purfling does too, if done right. On laminates, binding can hide an ugly edge. A good binding should, 1; look good, 2; make the instrument stronger, 3; not add weight to the instrument. The looks good part is very personal. Some people love the binding to stand out, others would like it to be un-noticeable.