Imagery is describing using the five sense of sight, sound, touch, taste, and smell. Yes, the imagery enhances our understanding of the story. In fact, the imagery is the most important part of this story, which otherwise has a very simple plot and theme, along with flat characterization: the vivid, theatrical imagery is what we remember. It creates the tension that builds up throughout this tale.
Perhaps the most memorable piece of imagery Poe uses is the clock. It is described as "gigantic," and made of ebony, a black wood. It chimes every hour in so loud and unusual a way that the orchestra is compelled to pause in its playing and all the dancers stop:
the waltzers perforce ceased their evolutions; and there was a brief disconcert of the whole gay company; and, while the chimes of the clock yet rang, it was observed that the giddiest grew...
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pale, and the more aged and sedate passed their hands over their brows as if in confused revery or meditation.
There is something particularly striking in the image of the dancers stopping and more or less freezing while the clock slowly and loudly tolls, but beyond that, note what Poe does: he lets the images tell the story and convey the deep anxiety that underlies the gaiety. When the clock tolls, the narrator doesn't tell us that the revelers fear death: he shows this to us. They grow pale with dread. They pass their hands over their brows. This communicates more forcefully than telling us with abstract language that the people locked into the palace know that it is only a matter of time—time symbolized by the striking of the black (deathlike) clock—until they too succumb to the Red Death.
As you read, you will find many other striking instances of imagery that build a mood of anxiety.
Absolutely, the imagery enhances the meaning of the story and, therefore, a reader's understanding of it. The imagery concerning the seven rooms of the abbey where Prince Prospero and his friends hide from the Red Death is particularly rich. In order from east to west, the rooms are draped in blue, then purple, then green, orange, white, violent, and, finally, black and "blood" red. Because these rooms are ordered from east to west, the direction from which the sun rises and the direction in which it set, they could be understood to symbolize the span of a human life (just as the space of a day does: sunrise = birth, sunset = death).
Further, the idea that death is represented by the final room of black and red is supported by the symbolism of the ebony clock. Black is often used to represent death (as is red in this story, since the plague's "Avatar and its seal [is] the redness and the horror of blood), and clocks are also often symbols of mortality. The fact that the revelers avoid the final room and seem especially anxious about the clock reinforces the idea that they fear death. However, the relentless ticking of the clock confirms that the notion that death is coming, that it is unavoidable (no matter how rich or lucky someone is). Thematically, all of this imagery and symbolism point to the idea that death is a part of life, and it is universal. The prince may believe that his money and youth and health can protect him, but it cannot.