Mining is a gathering skill that lets players break down mining nodes into ores. It feeds directly into Smithing and is one of the more reliable ways to make gold early on, growing steadily more profitable at higher tiers - especially once Mithril Ore and Gold Ore enter the picture.
Banking your ores lets you sell them or feed them into Smelting/Smithing; dropping them instead trades that value away for a faster mining rate.
Ore XP & Profit
Approximate rates for mining continuously at each tier. Gather Difficulty is the node's internal difficulty rating (higher = harder/slower to mine); it isn't a direct time value, but it scales roughly with how punishing a node is relative to its neighbors. The Essence Geode, Ebony Ore, and Ebony Dust XP/Hour and Gold/Hour numbers are unconfirmed, since nobody's timed continuous mining sessions on them yet.