When a company buys a server or a building, it does not treat the full price as an expense in one year. It spreads the cost across the asset's estimated useful life, using a method such as straight-line, where an equal amount is charged each year. The charge reduces reported profit but does not involve a cash payment in that year, since the cash was spent when the asset was bought.
Depreciation matters for companies that invest heavily in equipment. As capital spending rises, depreciation follows, and over time it takes a bigger share of revenue and puts pressure on operating margin.
The useful life is an estimate, and companies can change it. Extending the life of servers, for example, lowers the yearly charge and lifts profit without any change in the business.
Read the notes on useful lives, compare depreciation with capital expenditure and watch for changes in estimates.