Without oak, many of the iconic and most recognizable wines in the world today would not exist. Oak has a special affinity for wine, and when used judiciously, can transform wine from the simple fermented grape juice that it is, into one of the most aromatically complex and flavorful beverages on this planet.
Oak does two main things to wine when aging occurs within it. The first of which, is it allows for some of the wine to evaporate from the barrel during aging, which calls for the constant topping up of the barrel with fresh wine from the winemaker. The second and most important thing oak does to a wine during aging, is that it allows for the wine to oxidize slowly during the aging process. Oxygen seeps through the grains in the wood, and softens the wine over time. Oak also imparts some of its own flavors on the finished wine. A wine that spends significant time in new oak barrels will start to take on flavors and aromas of vanilla, coffee, chocolate, dill, and an impression of caramelized sweetness on the palette.
There are also two main types of oak used in the winemaking process. The first of which is French oak, which tends to be softer and impart more of the sweet vanilla and clove elements found in wine. The second is American oak, which tends to be stronger and more overpowering in the flavors it imparts on the final product. You will see a much more pronounced aroma of cedar, dill, and strong smells of caramelized, and sometimes even burnt vanilla.
Lastly, a winemaker may choose to use new or used oak. When an oak barrel has had 5 to 6 vintages of wine in it, it ceases to impart any flavor to the wine. Many winemakers choose to use this particular type of barrel to allow for the natural flavors and characteristics of the varietal and origin of the grape to shine through, without masking the natural flavors and aromas of the grape with that of oak. In aging with these older oak barrels, the wine is still exposed to oxygen and evaporation, softening the wine, and allowing it to mature. This allows for a much purer expression of the vineyard and varietal, and in many cases, a much more complex and interesting wine.
My own personal taste tends to lean towards the use of moderate to almost no oak. I find that the use of too much new oak strips the wine of any varietal character and in some cases is a way for the winemaker to cover up poor fruit, and bad vineyard practices. If oak is used irresponsibly, the wine can end up tasting like a vanilla-coated two by four, and that makes for a very unpleasant drinking experience.