I think its important because the peice of lit. may be a reflection of the surroundings it was written in. I was just curious of other opinions.
Understanding a time period is very important. If a reader is reading a text which speaks openly about slavery and uses derogatory names, one should understand that during the period which the text was written deemed it "okay." I always have to remind my students that a text comes from a different time, far away from our own, which allowed the use of specific terminology.
Understanding why an author had specific ideologies, beliefs, and stands is all a part of the influence the period around them had upon them.
Another example - The Adventures of Huckleberry Finn was written to include the carefully constructed dialects of a variety of groups of people living in various locations and social circumstances, with those dialects reflecting educational levels and social attitudes. Some of the vocabulary in the book, one "n" word in particular, was accepted and uncontroversial at the time Twain wrote, but causes a great deal of reaction and discussion in our time period.
Good literature can stand on its own, but every work is a product of its environment. Understanding the cultural and historical context helps you get the full meaning of the work. It helps to understand how characters are reacting, because they are a product of their environment too.
To answer with an example, I'd suggest that the way we read and interpret work for social and political meaning is tied to the period in which a work is created. We'd read Heart of Darkness very differently if it were written in the 1960s or today.
The connotations around the word "savage" have changed so that now the term is charged and would be considered racist.
Literature is a reflection of the time period the author lived in as well as the ideas they held about that time period. For instance, an author might choose to write about a time period that was well before their own. Their story will still be colored by their own time period because this shapes the way they see the past. In such a case, it is important to understand both the time period the story is set in as well as the time period the author is living in. Without such understanding, we will likely misunderstand and/or misinterpret large portions of the story. There are often subtle but specific clues about a time period in a story. If I didn't know that a woman during Victorian Times would never have allowed her ankle to show, I might not understand why the characters find a particular woman perverse for wearing a dress that is an inch or two above the ground.
It is imperative to comprehend a given piece of literature in the era in which it was written. Without that perspective, one imposes 21st century Western biases to the text. The clearest example of this can be found with the disputes over the Bible -- the only way it truly makes sense is to understand the eras and languages in which its various books were written. But as others have noted, you needn't go back to Biblical times -- meanings have altered greatly in English alone since Elizabethan times. Once a thorough understanding is acquired, then those "timeless themes" can be comprehended in their entirety, which is why great literature continues to be read.
This is an interesting debate, because there are some that would argue that a piece of literature, if it has value, should not be connected to a specific historical context for it to endure, as its message should be timeless. However, one could argue that to understand those timeless themes you need to understand how literature often grows out of a particular context that then applies to universal themes.
You're right for a very basic reason: words change meanings, and it's important to know the meanings of the words used in a work of literature at the time when the work was written. For example, "wit" and "pride" had different connotations and even denotations in the English Renaissance than they tend to have today. Also, when King Lear says that crosses (burdens) have "spoiled" him, he does not mean "spoiled" in the sense in which that word is usually understood today. About ten different meanings from Shakespeare's time apply, but few of those meanings are used today.
I think you're right. You need to understand what was going on at the time and what sorts of attitudes people had so that you can know how you're supposed to perceive the characters. You need to know whether a character who seems odd to us today really is supposed to seem that way or if he/she would be normal for those times.
It is also important as understanding the situation at the time will, ultimately, help you understand the literature, and spot if any reasons/situations/pieces of information/idols/people etc. have reflected in the work/writing.