Algae functions in water in much the same way trees do on land - that is, they convert carbon dioxide into oxygen. Algae is also an excellent food source for many living things, including fish.

Algae is used in many ways. Algae can be made into health food drinks such as Spirulina. Algae is also used as an alternate fuel in some places. You can find more information here: http://www.cnn.com/2008/TECH/science/04/...