If the police charge you with a crime, it may be obvious to you that they made a mistake, but it may not be so to them and others. However much you plead your innocence, the prosecution may do all it can to put you behind bars.
Having an alibi can be one of the most effective ways of showing you did not commit the crime you stand accused of.
An alibi shows you were not there at the time the crime was committed
Bar a few special cases where you can commit a crime remotely, you generally need to be at the crime scene at the time it was committed to have been able to do it. If you can show you were not, a court should declare you innocent.
A court won’t just take your word for it when you say you were not there. You need to prove it. You can do this by having someone or something to vouch for you being elsewhere.
Human alibis
Maybe your boss can verify that you were sitting at your desk in the office when the crime was committed. Perhaps a bartender remembers you sitting at the bar all night long.
Non-human alibis
Maybe your boss did not see you as you were working from home, but they can access records from the company system showing you were entering data into a spreadsheet the whole time. Perhaps the bartender does not remember you, but your credit card statements show you in their bar buying beer when the crime was committed.
Alibis can be a powerful form of defense, but the prosecution may still try to disprove them or allege that a human alibi is lying. Taking legal help to defend against charges is crucial to give yourself the best chance of acquittal.