A cover letter should always be used to accompany a CV or resume when applying for a job. A cover letter is the 'cherry on top' of a job application and shows that you have taken the time and consideration to walk your potential employer through your best assets as a preview to the actual CV.
A covering letter should be used to introduce yourself and explain why you are applying to the post, which post you are applying to, and why you are better suited than the thousand other applicants to the post! You should always find the name of the person who will be reading your application. It is much more personal to do this than to use a generic ' To the manager' or 'To whom it may concern' and shows you have gone to some effort. It is the small touches like this which will impress upon the employer how much more effort you have gone to than the competition in researching and applying to the post to which you are interested.
Obviously you should have the required skills and knowledge to do the job or if not then the enthusiasm to learn quickly and be of use in your new post. If you are applying to a post to which you are under qualified you need to explain this in your covering letter. Perhaps you are having a career change and have found some enthusiasm for a new direction. This may or may not be acceptable to the employer and they might simply ignore an application from someone who is unqualified for the job. However if you draw on your other experiences and paint yourself in a brilliant light, explaining what your other talents and skills will bring to the role, you may well win over the them over.
You should always paint yourself in the best possible light, whatever your experiences, when writing a covering letter. Include reasons for applying to the job, your most relevant skills, qualifications, experiences and previous employments. A cover letter should really not be more than a single side of paper and will tell the interviewer everything they need to know in a brief, concise manner. When closing do so in a grateful way and always request an interview. Use good quality paper and type out your application if possible.
In short a cover letter allows the employer to quickly sift through many applications and decide which are heading for the top and which are heading for the waste paper bin. Make sure you spend plenty of time getting it right. Always use spell check and get a friend to read over it once done to check for any errors or omissions.
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