There is also some more detail on the use of <mvc:annotation-driven /> in the Spring docs. In a nutshell, <mvc:annotation-driven /> gives you greater control over the inner workings of Spring MVC. You don't need to use it unless you need one or more of the features outlined in the aforementioned section of the docs.
Also, there are other "annotation-driven" tags available to provide additional functionality in other Spring modules. For example, <transaction:annotation-driven /> enables the use of the @Transaction annotation, <task:annotation-driven /> is required for @Scheduled et al...