Very simply explained a Google Annotation is a note made in Google Analytics.

This is exceptionally helpful and in my eyes an absolute must. Imagine you check back on your analytics and you see a huge spike or drop in traffic on a particular day or over a particular period of time. Perhaps it is easy to see why there is a spike or a drop, for example it is December and everyone is clearly searching for presents there will be a spike... but this isn't always the case. It is not always easy to see what caused changes.

Wouldn't you want to know exactly what you did at that time that had that effect?

It is easy to spot if you have done something today and you have an increase in traffic today but over time you will forget what happened now.