Use of making a header file?

Okay, so I'm doing this small project.. On the forums, I see a lot of people who make a header file containing their class definition, and then include it in their CPP file. What purpose does this serve exactly? And if someone could help me as to how to go about it? What file should have what defined in it?
This is not needed in most cases as it makes code harder to read, but it is needed for static member variables and to properly forward declare for circular dependencies.

Thank you... :)
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