In the GarageBand EQ display the "dots" are the center frequencies of each band of the EQ. When you change the center frequency of a band [by moving the associated dot or by selecting a band and dragging the number [in Hz] next to Frequency: below] it changes the frequency range that's affected when boost or cut is applied. This should be easy to hear, as the tonal change dialed up by boosting/cutting will be different when applying EQ at different frequencies.
Since there are multiple bands you don't have to move a center frequency [dot] too far -- it's for adjusting the center frequency of a particular band between the two bands on either side. You'd asked about this earlier in this thread and several videos were recommended showing various EQs in operation [including Logic's EQ which has pretty much the same display as GarageBand's] -- if you re-watch them this should become clear, particularly video 11 in this course, which illustrates the effect of changing the center frequency of an EQ band:
And if you try it for yourself [with a large, obvious boost somewhere in the center area] the effect of adjusting the center frequency should be obvious.
As to why you should adjust center frequency, it's so you can find the best frequency to boost or cut to achieve the tonal change you want, which you'd do by ear. If you don't have a particular tonal change you want to achieve, then you don't need to use the EQ.