Doctrine of Precedents, better known as Stare Decisis (Latin) in the American legal system. The Websters dictionary defines it as "a doctrine or policy of following rules or principles laid down in previous judicial decisions unless they contravene the ordinary principles of justice."
Its main advantage is that it provides uniformity and predictability of the law. For example, a lawyer can research the precedents and know how the courts have decide on certain issues, and how the court will most likely decide it now. It provides the judges with certain standards when faced with issues previously considered and decided.
Its disadvantage is that, if rigidly followed, precedents may produce inequitable results. This is because each case presents new and unique facts that may or may not fit into the precedent. Sometimes precedents bind a judge's decision even if he/she does not agree with it.
Please note that Stare Decisis is binding on lower courts. For example, U.S. Supreme Court decisions must be followed by all federal and state courts (since it is the highest court). However, a Supreme Court decision does not bind its later decisions (it can choose to overturn previous decisions), only lower courts (Courts of Appeals and District Courts) are bound.