One of the essentials of lawn care is making sure that you do not have too much soil compaction. Over time, your soil will become compacted and harder beneath the grass. This begins to cause problems like moisture penetration and grass root restriction. Aeration makes it possible for your soil to breathe a little easier.
There are two types of aeration. One is the kind called "plugging", where a special device removes clumps of soil, about the size of a finger, from out of the ground. The other kind simply punches holes into the soil. The point, however, is that this allows water seep down better (preventing erosion and drying out), as well as providing room for helpful organisms like earthworms to live. It is usually possible to rent an aerator if you do not wish to buy one. It is good to aerate about once every year or two.
