Zoom lets you record video that seems like you were close to the subject without being so close.
Digital camcorders may have two types of zoom, optical and digital:
Optical zoom works by moving the CCD toward or away from the lens, or moving the optics of the lens assembly. As long as the camcorder has a decent lens, optical zoom has no loss of quality.
Digital zoom works by taking a section of the image and enlarging it digitally. Unlike optical zoom, digital zoom does not retain the images detail as it enlarges it, so digitally zoomed images have less clarity.
This means that digital zoom is almost useless. Because everything is done digitally, digital zoom doesn't cost a lot of money to the manufacturer, so camcorders are sometimes advertised with hundreds of times digital zoom when really it is almost useless.
Camcorders with megapixel or higher CCDs may be an exception. Since a higher megapixel sensor has more image information, you may be able to use digital zoom on a megapixel CCD without loosing clarity.