Cookies were originally introduced to provide a way for users to record items they want to purchase as they navigate throughout a website (a virtual "shopping cart" or "shopping basket"). Today, however, the contents of a user's shopping cart are usually stored in a database on the server, rather than in a cookie on the client. To keep track of which user is assigned to which shopping cart, the server sends a cookie to the client that contains a unique session identifier (typically, a long string of random letters and numbers). Because cookies are sent to the server with every request the client makes, that session identifier will be sent back to the server every time the user visits a new page on the website, which lets the server know which shopping cart to display to the user.
Another popular use of cookies is for logging into websites. When the user visits a website's login page, the web server typically sends the client a cookie containing a unique session identifier. When the user successfully logs in, the server remembers that that particular session identifier has been authenticated and grants the user access to its services.
Because session cookies only contain a unique session identifier, this makes the amount of personal information that a website can save about each user virtually limitless—the website is not limited to restrictions concerning how large a cookie can be. Session cookies also help to improve page load times, since the amount of information in a session cookie is small and requires little bandwidth.
Cookies can be used to remember information about the user in order to show relevant content to that user over time. For example, a web server might send a cookie containing the username that was last used to log into a website, so that it may be filled in automatically the next time the user logs in.
Many websites use cookies for personalization based on the user's preferences. Users select their preferences by entering them in a web form and submitting the form to the server. The server encodes the preferences in a cookie and sends the cookie back to the browser. This way, every time the user accesses a page on the website, the server can personalize the page according to the user's preferences. For example, the Google search engine once used cookies to allow users (even non-registered ones) to decide how many search results per page they wanted to see. Also, DuckDuckGo uses cookies to allow users to set the viewing preferences like colors of the web page.
Tracking cookies are used to track users' web browsing habits. This can also be done to some extent by using the IP address of the computer requesting the page or the referer field of the HTTP request header, but cookies allow for greater precision. This can be demonstrated as follows:
By analyzing this log file, it is then possible to find out which pages the user has visited, in what sequence, and for how long.
Corporations exploit users' web habits by tracking cookies to collect information about buying habits. The Wall Street Journal found that America's top fifty websites installed an average of sixty-four pieces of tracking technology onto computers, resulting in a total of 3,180 tracking files. The data can then be collected and sold to bidding corporations.
Source - Wikipedia