Right at the start of an event you are give route instructions, witch are give as 6 figure plots to put on an Ordnance Survey map. The route is comprised of simply Time Controls (TC's) and Passage Controls (PC's) that lead to each other and you have to visit them in the correct order and in the right direction.
You have a TC at the start and end with clocks on them (and sometimes ITC inbetween them) and you are give a start time, say 00:00 and given 5 minuets to do a 2.5 mile section, so your due time for the end control is 00:05. You try and get to that control by that time if your late that's the time you drop on that section, if your early you have to wait, and you have 'cleaned' the section.
Inbetween the start and finish controls you have the PC's where you have to stop and obtain a signature from the marshal, confirming that you have visited the control correctly. If you enter the control the wrong way or obtain a time earlyer than you wanted (got a 00:04 at the finish control mentioned earlier) you get a fail.
So when you think about it, obtaining a 30MPH average, down some twisty/muddy/narrow lanes/tracks, while having to stop for signatures etc is hard.
The winners are decided first by the least number of fails, not amount of time dropped, so if someone has dropped no time all night but got 5 fails, and someone has dropped 10 mins and got no fails, the one who dropped 10 mins wins. If no one has got a fail, then the amount of time dropped is used to determine the winner.
That's why its a navigational based thing, the navigator has to make sure your going the right way, on the right time and make sure the signatures are all obtained.
Why do we do it? Its our hobby, same reason as people modify cars, attend cruises etc, the social side is massive in Wales, well over a 1000 people at the start venue of the rally I did last weekend.
P.S If you want to find out more, visit your local motor club, there usually always welcome to introduce new people to the sport