Big Brother is not a real entity. Why is Big Brother needed?
Big Brother is a figurehead of the government of Oceania, where the story takes place. The Party, those in charge of everything, even thoughts may have invented Big Brother or they may have co-opted him from a previous ruling party. However, the unchanging face, voice, presence of Big Brother is used to totally oppress and dominate the population of Oceania. The fact that Winston can't remember a time without Big Brother means that he and everyone else has probably accepted that Big Brother has always been and always will be in charge. This is a psychological ploy to keep the population from rebelling. If something has always been, it is less likely people will try to change it. It is seen as inevitable and constant like the ocean.
In the end, people are willing to give up all their freedoms, even freedom of thought for Big Brother because he demands it. It is almost a cult of personality. People are more willing to sacrifice themselves for a 'messiah' than a goverment. In fact, Winston participates in the 'newspeak' in order to keep his job and out of a concentration camp so often that he sometimes can't tell if he hates or loves Big Brother. This level of psychic domination is totalitarianism at it's height of power. Without the Big Brother figurehead, people would have only government to look to and not an all present, omniscient being.