Need an analogy?
If each person has their own brand, their brand identity is the group of key visual attributes that make up their image. Their physical look, the way they dress, their haircut, tattoos, and the lifestyle image they portray are a few examples.
Why does it matter?
Whether you like it or not, everyone who interacts with your business is forming an opinion about it. They are placing it and trying to understand it. It is in the best interest of the business to proactively and intentionally cue them with a set of distinct and consistent visuals so they see the business in a certain way…the way you want them to see it. Your brand identity is the family of key visual elements used to do just this.
How does it apply?
Brand identities apply to digital products in many of the same ways as they apply to organizations of all sizes and types. One subtle difference; with digital products, the brand identity comes through in every product interaction.