Welcome to RB Matthew!
Overflows are necessary if you want to have a sump with your setup. Most people with reef tanks 55 gallons and larger have sump, whereas many people with smaller tanks do not. Is it necessary -no, but it is very nice to have in order to get equipment out of your main display tank to free up space and make it look better. Sumps also add water volume to your system so the water is more stable. The basic purpose of the overflow is to get water from the main display tank to the sump in a controlled manner. If you go to a pet store and ask them to see a reef ready tank, they should show you a tank that has a overflow box on the back wall of the tank (generally black) and a couple holes in the tank within the box compartment. This is basically the overflow area.
I'll see if I can find a good writeup that explains them better for you.
Here is a picture from inside a typical overflow compartment.
