Rooting your phone is kind of like logging into as administrator instead as a regular user. It allows you to do things that only rooted users can. Such as turn your phone into a wireless router, backup your apps and data, run custom ROM's, or custom Kernels.

What are custom ROM's? ROM's are the operating system for the device. Kind of like how windows 2000 is different from XP or vista. Or how Mac's look different then Microsoft Windows.

What are custom Kernels? Kernels are the software that runs between the hardware of the device and the programs on the phone. Some kernels can OverClock your devices processor making them run fast then before.

I must warn you that rooting your phone will void your devices warranty. However most if not all of android devices can be unrooted and brought back to stock and can be returned without the company even knowing your device was ever rooted.

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