What is a chain of evidence document, and why is it important to forensic investigations?

1 - it shows who obtained the evidence, where and when the evidence was obtained, who secured the evidence and  who had control or possession of the evidence.

2 -  Who had custody at every step along the way? If resources allow, have two forensics personnel assigned to each case every step of the way. Specifically, having one person document what the other is doing and how they are doing it provides for a very detailed and accurate record of the handling of the evidence. Important in the documentation are the times and dates steps were taken, the names of those involved, and under whose authority were the steps taken?
If nothing else, by having this complete documentation you should be able to refute any claims of mishandling - especially if you have followed the steps defined within your methodology! Also, the documentation can provide a good point of reference for jogging the memories of the forensic examiners when case duration is lengthy and/or caseload is high.