This administrator SharePoint Tutorial shows how to configure outgoing e-mail settings. Outgoing e-mail settings are required e.g. if you want to use SharePoint alerts.
Open SharePoint Central Administration and go to system settings to configure outgoing e-mail settings. Set an outbound SMTP server, a mail from address and a reply to address. This configuration step is required to use alerts in SharePoint which don't work if the outgoing e-mail settings are not configured.