A bleed is necessary because there are small shifts that occur when printing many copies of the same image. If you were cutting out each card individually this wouldn't matter, but since we are cutting a stack of paper at a time, there must be some allowance made for these small variations. The goal is to make it possible for the cut to be off a couple millimeters in any direction and not have any visible effect in the finished card.

Also remember: the variation could also cut a few millimeters into the card instead, so don't put anything important (like text) too close to the edge. This is called safety.

Here are three examples: a card without a bleed, a card with an inappropriate bleed, and the final card which is set up correctly.