“Pinyin” is the way that Chinese characters are transcribed into latin script. It is the Chinese alphabet system. This systems sets a standard of pronunciation and tones (something characters don’t do).
For an English speaker learning Chinese it is a huge help when learning to speak Chinese. I have found that it helps us leaners in the following three ways:
Reading – You can start to read Chinese almost instantly (almost). When an English speakers looks at a word written in Chinese they are dumbfounded. They don’t even know where to start. With pinyin, they can make an intelligent guess. After some basic training in the difference pronunciation of familiar letters and how tones play a role in the words, an English speaker can read a sentence in Chinese, even if he doesn’t understand the meaning of the sentence.
Remember Tones – When you write pinyin you write the tone marker above the word. This help you to remember the tone of the word. Also, when reading pinyin, you know exactly what tone to use because it is indicated above the word. After reading a lot of pinyin you can start to see the tones in the same way you see the spelling.
Writing/Transcribing – When you first hear words in Chinese and you don’t know the Character, how can you write it? Using pinyin, you can write the pronunciation and tone. It doesn’t matter which “character” you have written because the pinyin spelling will be the same if it is the same pronunciation and tone.
If you are learning Chinese, I would urge you to be strong in pinyin. It is more than for beginners use! They have the Bible in pinyin and print books in pinyin at a pretty high level. You can use it for a long time.
The downside is you don’t have the character that shows the different meaning for a word with the same pronunciation and tone… but this is the same problem with spoken Chinese and can usually be overcome with context in met cases.