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A hacker is someone with an unauthorised person views or affects files. Their are different ways a hacker can enter your computer: they could break into your house and go in the same way you would; if you give computer details to a dodgy website they can access your computer from theirs and through trojan horse where you press a button allowing them to enter.
They can damage your computer as well as many other parts of your life. They can find documents containing personal information such as usernames and passwords for email adresses and websites; they can find bank details and pin numbers; they could break your computer and then move on to a friends from finding their information on your computer.
To prevent a hacker accessing your computer their are lots of things which you can do:
add a username and password before you enter the computer as well as on important private documents
backup your computer (find out more on 'Brilliant Backups' page)
Use antivirus software such as McAfee or Norton
Don't give details to any unknown or dodgy websites